chapter 18 - Chapter 18 The Markets For the Factors of...

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Unformatted text preview: Chapter 18 The Markets For the Factors of Production TRUE/FALSE 1. If the marginal productivity of the sixth worker hired is less than the marginal productivity of the fifth worker hired, then the addition of the sixth worker causes total output to decline. ANS: F DIF: 2 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Marginal product of labor MSC: Interpretive 2. In 2008, the total income of all U.S. residents was approximately $120 billion. ANS: F DIF: 1 REF: 18-0 NAT: Analytic LOC: Labor markets TOP: Income MSC: Interpretive 3. In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker. ANS: F DIF: 2 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Value of the marginal product MSC: Interpretive 4. Let L represent the quantity of labor and let Q represent the quantity of output. Suppose a certain production function includes the points ( L = 7, Q = 27), ( L = 8, Q = 35), and ( L = 9, Q = 45). Based on these three points, this production function exhibits diminishing marginal product. ANS: F DIF: 2 REF: 18-1 NAT: Analytic LOC: The study of economics, and definitions of economics TOP: Diminishing marginal product MSC: Applicative 5. When a competitive firm hires labor up to the point at which the value of the marginal product of labor equals the wage, it also produces up to the point at which the price of output equals average variable cost. ANS: F DIF: 3 REF: 18-1 NAT: Analytic LOC: The study of economics, and definitions of economics TOP: Competitive firms | Profit maximization MSC: Applicative 6. The demand for computer programmers is inseparably tied to the supply of computer software. ANS: T DIF: 1 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Labor demand MSC: Interpretive 7. If Firm X is a competitive firm in the market for labor, it has little influence over the wage it pays its employees. ANS: T DIF: 1 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Labor demand MSC: Interpretive 8. The idea that rational employers think at the margin is central to understanding how many units of labor they choose to employ. ANS: T DIF: 1 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Labor demand MSC: Interpretive 9. For competitive firms, the curve that represents the value of marginal product of labor is the same as the demand for labor curve. ANS: T DIF: 2 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Labor demand | Value of the marginal product MSC: Interpretive 195 196 Chapter 18/The Markets For the Factors of Production 10. The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor. ANS: F DIF: 2 REF: 18-1 NAT: Analytic LOC: Labor markets TOP: Value of the marginal product MSC: Analytical 11. To compute the value of the marginal product of capital, you should multiply the market price of the good by the marginal product of capital....
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This note was uploaded on 11/09/2011 for the course ECON Econ taught by Professor Morris during the Spring '10 term at City Colleges of Chicago.

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chapter 18 - Chapter 18 The Markets For the Factors of...

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