Question 1

Diminishing marginal product is closely related to:

Accepted Answer

A)   increasing marginal cost
B)   diminishing marginal cost
C)   diminishing total cost
D)   none of the aboveE) B) and C)
F) A) and D)

Question 2

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the:

Accepted Answer

A)   marginal cost of the output
B)   change in total profit
C)   market price of the output
D)   additional revenueE) B) and C)
F) A) and D)

Question 3

Describe the difference between the purchase price of capital and the rental price of capital. If you know the value of marginal product from the flow of capital services, how would you determine the market price for the capital stock?

Accepted Answer

The purchase price of capital is a refle...

Question 4

Owners of capital earn their income in the form of which of the following? (i)  interest
(ii)  profit
(iii)  wages

Accepted Answer

A)   (i)  and (ii) 
B)   (ii)  and (iii) 
C)   (i)  and (iii) 
D)   (i) , (ii)  and (iii) E) A) and B)
F) B) and C)

Question 5

Factor market analysis could not be complete without some characterisation of:

Accepted Answer

A)   the marginal productivities of the different factors
B)   market prices for final goods and services
C)   product market demand
D)   all of the aboveE) A) and B)
F) A) and C)

Question 6

How much labour will a competitive, profit-maximising firm hire?

Accepted Answer

A)   the firm will hire until marginal product equals the wage
B)   the firm will hire until the price of the final good equals the wage
C)   the firm will hire until the value of the marginal product equals the wage
D)   the firms will hire until the price of the final good equals the marginal productE) B) and D)
F) A) and B)

Question 7

As the rental price of capital decreases, less capital is used in production and the marginal product of capital increases.

Accepted Answer

A) True 
 B)False

Question 8

Bob has been a private school caretaker for 30 years. For practical purposes, assume that Bob's productivity never changes. What then, if anything, will decrease the value of the labour that Bob performs?

Accepted Answer

A)   a decrease in the productivity of the other janitors
B)   a decrease in janitorial unemployment rates
C)   a decrease in the tuition fees
D)   all of the aboveE) A) and B)
F) C) and D)

Question 9

A competitive profit-maximising firm hires workers up to the point where the wage equals the price of the final good.

Accepted Answer

A) True 
 B)False

Question 10

A profit-maximising competitive firm that experiences diminishing marginal product of labour must also be experiencing:

Accepted Answer

A)   an upward-sloping demand for labour
B)   a horizontal demand for labour
C)   a downward-sloping demand for labour
D)   a diminishing demand for the outputE) None of the above
F) B) and C)

Question 11

The production function describes the relationship between the variables:

Accepted Answer

A)   inputs and cost
B)   inputs and revenue
C)   outputs and cost
D)   inputs and outputsE) A) and C)
F) A) and B)

Question 12

Gertrude Kelp owns three boats that participate in commercial fishing for fresh tuna. As part of her business she hires a captain and several crew members for each boat. In the market for fresh tuna, Gertrude is one of thousands of fishers. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of tuna is negligible relative to the size of the market.
-Refer to the information provided. Suppose the price of fresh tuna suddenly increases, Gertrude is likely to react by:

Accepted Answer

A)   becoming a seller in the factor market
B)   hiring less crew workers
C)   increasing her demand for crew workers
D)   trying to decrease her catch to preserve fish stocksE) C) and D)
F) A) and D)

Question 13

When labour supply increases, the equilibrium wage falls and employment increases.

Accepted Answer

A) True 
 B)False

Question 14

Grahame has a crocodile farm. He collects eggs from the wild which are hatched on the farm. Suppose flooding is very severe this year and eggs become much harder to find. As a result, Grahame should expect to see the marginal productivity of his land:

Accepted Answer

A)   decrease
B)   increase
C)   remain unchanged
D)   turn negativeE) A) and C)
F) B) and C)

Question 15

What does a firm's labour demand curve represent?

Accepted Answer

A)   the number of workers that are willing to work at any given wage
B)   the number of workers that the firm is willing to hire at any given wage
C)   quantity of labour supplied at the market wage
D)   the marginal product of labourE) None of the above
F) A) and B)

Question 16

In a competitive labour market, wages will adjust to equal the marginal product of labour.

Accepted Answer

A) True 
 B)False

Question 17

During the Black Death, with fewer workers available to farm the land, an additional unit of land produced less additional output.

Accepted Answer

A) True 
 B)False

Question 18

The South African government started to patrol the border and had a policy of returning all refugees to Zimbabwe. This policy would:

Accepted Answer

A)   increase the supply of Zimbabwean labour
B)   increase the demand for Zimbabwean labour
C)   decrease the demand for Zimbabwean labour
D)   prevent an increase in the supply of Zimbabwean labourE) B) and C)
F) A) and C)

Question 19

Which of the following factors of production are most likely to be used by a typical firm? (i)  labour
(ii)  land
(iii)  equity

Accepted Answer

A)   (i)  and (iii) 
B)   (ii)  and (iii) 
C)   (i)  and (ii) 
D)   (i) , (ii)  and (iii) E) None of the above
F) A) and D)

Question 20

An example of capital would be:

Accepted Answer

A)   the amount of bank financing needed to keep a business solvent
B)   the number of wrenches used by a mechanic
C)   the amount of equity used to finance a business
D)   all of the aboveE) B) and D)
F) All of the above

Exam 19: The Markets for the Factors of Production

Describe the difference between the purchase price of capital and the rental price of capital. If you know the value of marginal product from the flow of capital services, how would you determine the market price for the capital stock?

Correct Answer
verified
The purchase price of capital is a refle...
View Answer

An example of capital would be:

Correct Answer
verified

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the:

Correct Answer
verified

Owners of capital earn their income in the form of which of the following? (i) interest (ii) profit (iii) wages

Correct Answer
verified

What does a firm's labour demand curve represent?

Correct Answer
verified

The South African government started to patrol the border and had a policy of returning all refugees to Zimbabwe. This policy would:

Correct Answer
verified

In a competitive labour market, wages will adjust to equal the marginal product of labour.

Correct Answer
verified

A profit-maximising competitive firm that experiences diminishing marginal product of labour must also be experiencing:

Correct Answer
verified

Which of the following factors of production are most likely to be used by a typical firm? (i) labour (ii) land (iii) equity

Correct Answer
verified

The production function describes the relationship between the variables:

Correct Answer
verified

When labour supply increases, the equilibrium wage falls and employment increases.

Correct Answer
verified

Grahame has a crocodile farm. He collects eggs from the wild which are hatched on the farm. Suppose flooding is very severe this year and eggs become much harder to find. As a result, Grahame should expect to see the marginal productivity of his land:

Correct Answer
verified

Factor market analysis could not be complete without some characterisation of:

Correct Answer
verified

As the rental price of capital decreases, less capital is used in production and the marginal product of capital increases.

Correct Answer
verified

Diminishing marginal product is closely related to:

Correct Answer
verified

A competitive profit-maximising firm hires workers up to the point where the wage equals the price of the final good.

Correct Answer
verified

Correct Answer
verified

How much labour will a competitive, profit-maximising firm hire?

Correct Answer
verified

Bob has been a private school caretaker for 30 years. For practical purposes, assume that Bob's productivity never changes. What then, if anything, will decrease the value of the labour that Bob performs?

Correct Answer
verified

During the Black Death, with fewer workers available to farm the land, an additional unit of land produced less additional output.

Correct Answer
verified

Exam 19: The Markets for the Factors of Production

Describe the difference between the purchase price of capital and the rental price of capital. If you know the value of marginal product from the flow of capital services, how would you determine the market price for the capital stock?

Correct AnswerverifiedThe purchase price of capital is a refle...View AnswerShow Answer

An example of capital would be:

Correct AnswerverifiedShow Answer

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the:

Correct AnswerverifiedShow Answer

Owners of capital earn their income in the form of which of the following? (i) interest (ii) profit (iii) wages

Correct AnswerverifiedShow Answer

What does a firm's labour demand curve represent?

Correct AnswerverifiedShow Answer

The South African government started to patrol the border and had a policy of returning all refugees to Zimbabwe. This policy would:

Correct AnswerverifiedShow Answer

In a competitive labour market, wages will adjust to equal the marginal product of labour.

Correct AnswerverifiedShow Answer

A profit-maximising competitive firm that experiences diminishing marginal product of labour must also be experiencing:

Correct AnswerverifiedShow Answer

Which of the following factors of production are most likely to be used by a typical firm? (i) labour (ii) land (iii) equity

Correct AnswerverifiedShow Answer

The production function describes the relationship between the variables:

Correct AnswerverifiedShow Answer

When labour supply increases, the equilibrium wage falls and employment increases.

Correct AnswerverifiedShow Answer

Grahame has a crocodile farm. He collects eggs from the wild which are hatched on the farm. Suppose flooding is very severe this year and eggs become much harder to find. As a result, Grahame should expect to see the marginal productivity of his land:

Correct AnswerverifiedShow Answer

Factor market analysis could not be complete without some characterisation of:

Correct AnswerverifiedShow Answer

As the rental price of capital decreases, less capital is used in production and the marginal product of capital increases.

Correct AnswerverifiedShow Answer

Diminishing marginal product is closely related to:

Correct AnswerverifiedShow Answer

A competitive profit-maximising firm hires workers up to the point where the wage equals the price of the final good.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How much labour will a competitive, profit-maximising firm hire?

Correct AnswerverifiedShow Answer

Bob has been a private school caretaker for 30 years. For practical purposes, assume that Bob's productivity never changes. What then, if anything, will decrease the value of the labour that Bob performs?

Correct AnswerverifiedShow Answer

During the Black Death, with fewer workers available to farm the land, an additional unit of land produced less additional output.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The purchase price of capital is a refle...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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