Chapter 18(sample exercise)

Chapter 18(sample exercise) - Chapter 18The Markets for the...

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Chapter 18—The Markets for the Factors of Production 1. In the Canadian economy, which of the following factors of production is considered to be the most important in terms of the magnitude of income earned by that factor of production? a. land b. labour c. profit d. capital 2. Which of the following best illustrates the concept of "derived demand?" 3 Diminishing marginal product serves to have what effect on the shape of the production function? 4 To maximize profit, a competitive firm hires workers up to the point of intersection of the a. marginal-product curve and the marginal-cost curve. b. value-of-marginal-product curve and the wage line. c. value-of-marginal-product curve and the marginal-revenue curve. d. total-revenue curve and the wage line. 5. If the value of the marginal product of labour exceeds the wage, then hiring another worker increases the firm's 6 For a competitive, profit-maximizing firm the labour demand curve is the same as the a. marginal cost curve. b. value of marginal product curve. c. production function. d. profit function. 7. If one observes a profit-maximizing firm starting with 50 employees and then increasing employment, it is possible to infer that, when 50 employees are hired, the a. wage exceeds the value of the marginal product of labour. b. value of the marginal product or labour exceeds the wage. c. marginal product of labour is increasing. d. firm is attempting to increase its market share. 8. What causes the labour demand curve to shift? (i) changes in productivity
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(ii) changes in wages (iii) changes in output prices Use the following table to answer the following questions. Table 18-1 Number of Workers Output Marginal Product of Labor Value of Marginal Product of Labor Wage Marginal Profit 0 0 1 100 $1,000 $500 $500 2 80 $ 800 $500 3 60 $500 $100 4 280 $ 400 $500 5 20 $500
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