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?" a. An increase in the wages of autoworkers will lead to an increase in the demand for robots in automobile factories. b. An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers. c. An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons. d. An increase in the price of gasoline will lead to an increase in the demand for small cars. 3 Diminishing marginal product serves to have what effect on the shape of the production function? a. The slope of the production function decreases as the quantity of input increases. b. The production function becomes steeper as the quantity of input increases. c. The production function slopes downward. d. The production function is horizontal beyond a certain quantity of input. 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 a. profit. b. total cost. c. total revenue. d. All of the above are correct. 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 a. (i) and (ii) b. (ii) and (iii) c. (i) and (iii) d. All of the above are correct. 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 9. Refer to Table 18-1 . If the firm hires two workers, the two workers together produce a. 80 units. b.
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This note was uploaded on 01/07/2010 for the course ECO eco1104 taught by Professor Davidgray during the Fall '09 term at University of Ottawa.

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

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