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Exam 13: How Factor Markets Work

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Question 61

Multiple Choice

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Suppose a cook at a diamond mining camp in Canadaʹs North earns a much higher wage than a cook with similar training and experience at an office building in Halifax. Economists would likely call this

A) a temporary factor-price differential.
B) a compensating differential.
C) an intrinsic difference.
D) an acquired difference.
E) an equilibrium differential.

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Question 62

Multiple Choice

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The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets. FIGURE 13-2 -Refer to Figure 13-2. This factor market is initially in equilibrium at point B, but changes occur that cause the equilibrium to shift to point D S curve shifts left) . At the new equilibrium, total factor earnings compared to the initial equilibrium.

A) decreased by $30
B) increased by $30
C) remained the same
D) increased by $10
E) increased by $330

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Question 63

Multiple Choice

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Consider the following demand and supply curves in factor markets. FIGURE 13-4 -Refer to Figure 13-4. The panel that best illustrates the supply of a factor to a specific firm in the economy is

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4 -Refer to Table 13-4. What is the marginal cost of the variable factor employed by this firm?

The three diagrams below each show a supply curve for oil tankers over a relatively short period of time. FIGURE 13-3 -Refer to Figure 13-3. Consider oil tankers as a factor of production for example, for the production of gasoline) . Which diagram shows the most mobility of this factor of production?

Choose the statement that best describes the difference between ʺeconomic rentʺ and other factor payments.

If a firm is a perfect competitor in its product market, the marginal product of a factor multiplied by the productʹs price equals

Consider labour that is hired for $18 per hour. If the last hour hired produces 8 units of output which sells for $2 per unit, that labour-hour adds to the firmʹs profit and so labour should be hired.

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets. FIGURE 13-2 -Refer to Figure 13-2. This factor market is in equilibrium at point B. Which of the following statements best describes factor payments at point B?

Consider a firmʹs demand curve for labour. If a technological change makes it harder to substitute capital for labour, the demand curve for labour

The table below shows the total production for varying numbers of hours worked producing yo -yos. The firm sells its product and hires its workers in competitive markets. TABLE 13-4 -Refer to Table 13-4. Which of the following statements best describes the situation of this firm when it is employing 15 hours of labour? The 15th hour of labour hired

If at a particular wage rate in a competitive labour market the quantity demanded of labour is less than quantity supplied of labour, then

The elasticity of supply of computer-game programmers will generally be greater if we are analyzing the amount supplied to

Consider the following demand and supply curves in factor markets. FIGURE 13-4 -Suppose that the municipal government of Calgary decides to tax economic rent on a highly sought -after piece of land. The result would be

Consider a small firm that is producing winter jackets. It can lease an additional sewing machine for one month for $1200. With this additional machine, the firm can produce an additional 7 jackets during that time period that it sells for $250 each. Hiring the marginal machine adds to the firmʹs profit and so it should the machine.

The hypothesis of equal net advantage explains why

Other things equal, if a particular province has some non-monetary advantages, such as a temperate climate, the wage rate in that province will be

Consider labour that is hired for $18 per hour. If the last hour of labour hired produces 8 units of output which sells for $10 per unit, that labour-hourʹs marginal revenue product is

Consider the following table for a firm. The first column shows the number of units of a variable factor of production employed by the firm. TABLE 13-2 -Refer to Table 13-2. Suppose the firm is a perfect competitor and faces a given price of the product equal to $2 per unit. The marginal revenue product of the 5th unit of the factor is

Assume that the market for farmland in the fruit-growing region of southwestern Ontario is perfectly competitive. Which of the following will shift the demand curve for this land to the left? 1) a decrease in demand for Canadian-grown fruit; 2) a change in consumer preferences toward eating more fruit; 3) scientific reports that confirm a reduction in water supply to the region.