Question 1

Derived demand:

Accepted Answer

A)   is the sum total of all factors of production for a given good or service.
B)   refers to the demand for variable inputs when at least one fixed input exists.
C)   refers to the supply decisions of a final good influencing the demand for the inputs needed to make it.
D)   is only computed for the long-run demand decisions based on short-run marginal changes.E) A) and B)
F) C) and D)

Question 2

Eli is headed to his job harvesting grapes at a local vineyard.He earns $8 every hour he works there.His friend calls him and asks him to go mountain biking for the next 2 hours instead.Eli cannot decide between the two activities.His indecision implies he values riding his mountain bike for two hours:

Accepted Answer

A)   more than $16.
B)   less than $16.
C)   at exactly $16.
D)   at no more than $8.E) None of the above
F) A) and B)

Question 3

If the income effect outweighs the price effect of a wage increase,the quantity of labor supplied will:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   drop to zero.E) A) and B)
F) A) and C)

Question 4

Which of the following is not how economists describe the term "economic rent?:

Accepted Answer

A)   The gains that workers and owners of capital receive from supplying their labor or machinery in factor markets.
B)   The producer surplus in output markets.
C)   The rental price of a factor of production minus the cost of supplying it.
D)   The total revenue that a factor of production earns its owner.E) B) and C)
F) None of the above

Question 5

The question of how much labor a firm will hire comes down to:

Accepted Answer

A)   whether added workers are going to generate more revenue or not.
B)   if the added workers are going to add profits to the firm.
C)   whether the value of the marginal product is greater than, less than, or equal to the average total cost.
D)   the amount of capital that will be required in order to ensure the worker is productive.E) B) and D)
F) B) and C)

Question 6

Sadie is getting ready to go to work where she earns $70 a day as a day laborer.Her friend Caroline calls her and asks her to go swimming with sharks for the day.Sadie decides to go with her.Sadie's choice implies that her opportunity cost of working is:

Accepted Answer

A)   less than $70.
B)   greater than $70.
C)   equal to $70.
D)   Cannot say without more information.E) A) and B)
F) A) and C)

Question 7

Which of the following industries would be considered to have a labor intensive production process?

Accepted Answer

A)   Farming in a rich country
B)   Working in a factory.
C)   Driving a cab.
D)   Writing a novelE) None of the above
F) A) and C)

Question 8

When a worker has a rare skill or talent,supply in that labor market:

Accepted Answer

A)   is low.
B)   is high.
C)   depends on the other factors of production.
D)   depends on the output produced.E) B) and C)
F) C) and D)

Question 9

If producers who hire labor in a competitive labor market decide to purchase the new automated machine that completes the work of 30 employees,we would expect the:

Accepted Answer

A)   labor-supply curve in that market to shift left.
B)   labor-demand curve in that market to shift left.
C)   labor-supply curve in that market to shift right.
D)   labor-demand curve in that market to shift right.E) A) and B)
F) C) and D)

Question 10

A market which consists of many sellers and only one buyer is called a:

Accepted Answer

A)   monopsony.
B)   monopoly.
C)   oligopoly.
D)   monopolistic competitor.E) B) and C)
F) C) and D)

Question 11

The supply of labor is determined by the:

Accepted Answer

A)   number of workers.
B)   opportunity cost of hiring labor.
C)   marginal product of labor.
D)   All of these statements are true.E) None of the above
F) All of the above

Question 12

We assume an upward sloping supply curve because:

Accepted Answer

A)   the income effect tends to dominate labor-supply decisions in the real world.
B)   it makes better theoretical sense that the price effect would dominate.
C)   it makes better theoretical sense that the income effect would dominate.
D)   the price effect tends to dominate labor-supply decisions in the real world.E) A) and B)
F) A) and D)

Question 13

If Tony receives a pay raise and the price effect outweighs the income effect on his labor supply decisions,he will:

Accepted Answer

A)   work more hours.
B)   work less hours.
C)   work the same hours no matter what.
D)   quit and not work at all.E) B) and D)
F) C) and D)

Question 14

When individuals are debating whether to supply labor,they think about all of the following except:

Accepted Answer

A)   the cost in terms of forgone leisure.
B)   the benefit of more income for each hour worked.
C)   whether the benefits outweigh the costs.
D)   the level of profits they bring to the firm.E) C) and D)
F) A) and B)

Question 15

In the market for labor:

Accepted Answer

A)   firms create the supply.
B)   the price in the market is the interest rate.
C)   individuals are the sellers of the good.
D)   there is never disequilibrium.E) A) and B)
F) A) and D)

Question 16

The factor distribution of income:

Accepted Answer

A)   shows how much income people get from labor compared to land and capital.
B)   refers to the pattern of income that people derive from different factors of production.
C)   hasn't changed substantially in the last century in the United States.
D)   All of these statements are true.E) A) and B)
F) A) and D)

Question 17

A worker will become indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

Accepted Answer

A)   greater than the opportunity cost.
B)   exactly equal to the opportunity cost.
C)   less than the opportunity cost.
D)   constant for each additional hour worked.E) None of the above
F) A) and B)

Question 18

When the benefit of another hour of work is greater than the opportunity cost,we would expect the worker to work:

Accepted Answer

A)   another hour.
B)   an hour less.
C)   exactly that amount.
D)   Cannot be determined without more information.E) A) and B)
F) A) and C)

Question 19

In the capital market,the purchase price is what a:

Accepted Answer

A)   producer pays to use a factor of production for a certain period or task.
B)   producer pays to gain permanent ownership of a factor of production.
C)   consumer pays to use labor or land services for a certain period or task.
D)   consumer pays to gain permanent ownership of a factor of production.E) A) and B)
F) B) and D)

Question 20

In general,as wages go up:

Accepted Answer

A)   people are willing to work less.
B)   the opportunity cost of leisure goes up.
C)   the opportunity cost of leisure goes down.
D)   people will always work more.E) None of the above
F) All of the above

Exam 16: The Factors of Production

If the income effect outweighs the price effect of a wage increase,the quantity of labor supplied will:

Correct Answer
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We assume an upward sloping supply curve because:

Correct Answer
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Sadie is getting ready to go to work where she earns $70 a day as a day laborer.Her friend Caroline calls her and asks her to go swimming with sharks for the day.Sadie decides to go with her.Sadie's choice implies that her opportunity cost of working is:

Correct Answer
verified

The supply of labor is determined by the:

Correct Answer
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When the benefit of another hour of work is greater than the opportunity cost,we would expect the worker to work:

Correct Answer
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A worker will become indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

Correct Answer
verified

Derived demand:

Correct Answer
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In the market for labor:

Correct Answer
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If producers who hire labor in a competitive labor market decide to purchase the new automated machine that completes the work of 30 employees,we would expect the:

Correct Answer
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A market which consists of many sellers and only one buyer is called a:

Correct Answer
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In the capital market,the purchase price is what a:

Correct Answer
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In general,as wages go up:

Correct Answer
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The factor distribution of income:

Correct Answer
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Which of the following industries would be considered to have a labor intensive production process?

Correct Answer
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When a worker has a rare skill or talent,supply in that labor market:

Correct Answer
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When individuals are debating whether to supply labor,they think about all of the following except:

Correct Answer
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The question of how much labor a firm will hire comes down to:

Correct Answer
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Which of the following is not how economists describe the term "economic rent?:

Correct Answer
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Correct Answer
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If Tony receives a pay raise and the price effect outweighs the income effect on his labor supply decisions,he will:

Correct Answer
verified

Exam 16: The Factors of Production

If the income effect outweighs the price effect of a wage increase,the quantity of labor supplied will:

Correct AnswerverifiedShow Answer

We assume an upward sloping supply curve because:

Correct AnswerverifiedShow Answer

Sadie is getting ready to go to work where she earns $70 a day as a day laborer.Her friend Caroline calls her and asks her to go swimming with sharks for the day.Sadie decides to go with her.Sadie's choice implies that her opportunity cost of working is:

Correct AnswerverifiedShow Answer

The supply of labor is determined by the:

Correct AnswerverifiedShow Answer

When the benefit of another hour of work is greater than the opportunity cost,we would expect the worker to work:

Correct AnswerverifiedShow Answer

A worker will become indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

Correct AnswerverifiedShow Answer

Derived demand:

Correct AnswerverifiedShow Answer

In the market for labor:

Correct AnswerverifiedShow Answer

If producers who hire labor in a competitive labor market decide to purchase the new automated machine that completes the work of 30 employees,we would expect the:

Correct AnswerverifiedShow Answer

A market which consists of many sellers and only one buyer is called a:

Correct AnswerverifiedShow Answer

In the capital market,the purchase price is what a:

Correct AnswerverifiedShow Answer

In general,as wages go up:

Correct AnswerverifiedShow Answer

The factor distribution of income:

Correct AnswerverifiedShow Answer

Which of the following industries would be considered to have a labor intensive production process?

Correct AnswerverifiedShow Answer

When a worker has a rare skill or talent,supply in that labor market:

Correct AnswerverifiedShow Answer

When individuals are debating whether to supply labor,they think about all of the following except:

Correct AnswerverifiedShow Answer

The question of how much labor a firm will hire comes down to:

Correct AnswerverifiedShow Answer

Which of the following is not how economists describe the term "economic rent?:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Tony receives a pay raise and the price effect outweighs the income effect on his labor supply decisions,he will:

Correct AnswerverifiedShow Answer

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