Download Section 13 Practice Test Number of Workers Output of Corn (units of

Section 13 Practice Test
Output
Number
of Corn
of Workers
(units of corn)
0
0
1
30
2
58
3
79
4
94
5
104
6
108
7
110
Table 69-2: Workers and Corn Output
1. (Table 69-2: Workers and Corn Output) Laura is a price-taking farmer who produces corn. Assume the wage rate
for workers is $125 and the price per unit of corn is $10. The table shows Laura's production function. To
maximize profits Laura should employ ________ workers.
a. two
b. three
c. four
d. six
e. five
Figure 69-1: The Value of the Marginal Product Curve
2. (Figure 69-1: The Value of the Marginal Product Curve) In the figure, if the market wage rate increases:
a. the VMPL curve would shift to the right.
b. the profit-maximizing quantity of labor will increase.
c. the VMPL curve would shift to the left.
d. the profit-maximizing quantity of labor will decrease.
e. there will be no change to the profit-maximizing quantity of labor.
3. A decrease in the demand for pastry chefs may come about because of an:
a. increased concern for fitness.
b. increase in the market wage rate for pastry chefs.
c. increase in the productivity of pastry chefs.
d. increase in the supply of other factors that pastry chefs use.
e. decrease in the price of other factors that are employed with pastry chefs.
4. Which of the following does not partially explain wage differentials?
a. different amounts of human capital
b. compensating differentials
c. differences in talent
d. differences in physical capital
e. perfectly competitive labor markets
Figure 69-2: Demand for Bricklayers in a Perfectly Competitive Labor Market
5. (Figure 69-2: Demand for Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers
is $100 per day, that price was determined by:
a. the firm hiring the bricklayers.
b. demand and supply in the market for bricklayers.
c. the government.
d. where VMPLbricklayers = MPbricklayers  P of output.
e. the union representing the bricklayers.
6. Human capital is the improvement in ________ created by ________.
a. physical capital; technology
b. labor; education and knowledge
c. labor; physical capital
d. labor; management
e. labor; unemployment
7. When labor is hired in a competitive market, the value of the marginal product of labor is computed by:
a. multiplying the price of the output by the marginal product of labor.
b. multiplying the price of the output by the wage paid to labor.
c. multiplying the wage paid to labor by the marginal product of labor.
d. dividing the marginal product of labor by the price of the output.
e. multiplying the price of the output by the total product of labor.
8. People who have higher levels of human capital will tend to:
a. work only in nonunion jobs.
b. receive higher salaries than those who have lower levels of human capital.
c. earn salaries based on marginal costs of their labor.
d. earn salaries higher than their values of marginal product.
e. consume almost zero hours of weekly leisure.
9. Stan has an employee, Barbara, who is the only female security guard at the company. Barbara is a “night owl”
and loves to work the midnight to 8 a.m. shift for the company. Stan knows that working through the night is
potentially more dangerous than working during the day, so he pays her an additional $2 per hour. This wage
differential is likely an example of:
a. equilibrium wages.
b. compensating differentials.
c. efficiency wages.
d. discrimination.
e. union power.
Quantity of Labor
(workers)
0
Quantity of Wheat
(baskets)
0
1
19
2
36
3
51
4
64
5
75
6
84
7
91
Marginal Product of Labor
(bushels per worker)
19
17
15
13
11
9
7
5
8
96
Table 69-3: Employment and Output
10. (Table 69-3: Employment and Output) In the table, if the price of a bushel of wheat is $10, then the value of the
marginal product of the third worker is:
a. $15.
b. $150.
c. $170.
d. $510.
e. $10.
Quantity
Total Product
of Labor
of Labor
(workers)
(cakes per worker)
0
0
1
3
2
10
3
16
4
21
5
25
6
28
Table 69-1: Total Product of Labor at
Debbie's Bakery
11. (Table 69-1: Total Product of Labor at Debbie’s Bakery) Debbie owns a bakery and can hire workers to produce
cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of
workers and the number of cakes produced. What is the value of the marginal product for the fourth worker?
a. five cakes
b. $50
c. $210
d. 21 cakes
e. $250
12. An efficiency wage describes a wage rate that is:
a. equal to the marginal factor cost of the most efficient worker at the firm.
b. efficient because it is exactly equal to the wage rate implied by the marginal productivity
theory.
c. determined by collective bargaining between unions and management.
d. equal to the VMPL adjusted so as to make the structure of compensation more equitable.
e. above the equilibrium wage and is paid in order to provide workers with an incentive to
perform efficiently.
Quantity
of Labor
Total Product
0
0
1
20
2
50
3
90
4
120
5
140
6
150
7
150
8
140
Table 69-4: Value of the Marginal Product
of Labor and Demand
13. (Table 69-4: Value of the Marginal Product of Labor and Demand) If the product price is $2 per unit, the value of
the marginal product for the fifth unit of labor is:
a. $0.
b. $20.
c. $40.
d. $60.
e. $280.
Output
Number
of Moisture
of Droids
(barrels per month)
0
0
1
25
2
45
3
60
4
70
5
75
Table 70-1: Droids and Moisture Output
14. (Table 70-1: Droids and Moisture Output) Luke Skywalker operates a moisture farm on the planet Tatooine. The
moisture farm utilizes droids. Luke's production function is given in the table. A barrel of moisture sells for 10
Republic Credits. A droid costs 65 Republic Credits per month to rent. How many droids should Luke rent?
a. one
b. two
c. three
d. four
e. five
15. Which of the following explains actual wage differentials in labor markets?
I. differences in talent
II. different amounts of human capital
III. compensating differentials
a. I only.
b. II only.
c. III only.
d. I and II only.
e. I, II, and III.
16. In the factor market for land, one will find equilibrium rental prices will be ________ the value of marginal
product of land.
a. less than
b. twice as high as
c. slightly greater than
d. unrelated to
e. equal to
17. An important assumption that underlies the marginal productivity theory of income distribution is that:
a. product markets are monopolistically competitive.
b. factor markets are perfectly competitive.
c. the relevant value of the marginal product is not the equilibrium value.
d. the firm does not own any land or physical capital.
e. the firm has wage-setting ability in the factor markets.
Scenario 69-1: Perfectly Competitive Market
Assume the product market is perfectly competitive and that the labor market is also perfectly competitive. Also
assume that the price of the firm's product is $5. The firm's total product with respect to labor is given in the table
below.
Quantity
of Labor
(number
of workers)
0
1
2
3
4
Quantity
of Output
0
7
13
18
21
18. (Scenario 69-1: Perfectly Competitive Market) What is the value of marginal product of the third worker?
a. $5
b. $25
c. $18
d. $10
e. $90
19.When each factor is paid a payment equal to the value of marginal product of the last unit of that factor employed in
the factor market as a whole, this is referred to as:
a. the compensating differential model.
b. diminishing marginal product.
c. the factor distribution of income.
d. the efficiency wage model.
e. the marginal productivity theory of income distribution.
20. A nurse willing to work the midnight to 8 A.M. shift may earn more than she would earn if she worked 8 A.M. to 4
P.M. because of:
a. discrimination.
b. market power.
c. differences in human capital.
d. efficiency wages.
e. compensating differentials.