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Exam 10: Input Demand: the Labor and Land Markets

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Question 61

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Refer to the data provided in Table 10.2 below to answer the following questions. Table 10.2 $\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$ -Refer to Table 10.2. The firm currently employs 4 workers at the market wage of $120 per worker per day. If the firm wants to maximize its profits, it should

A) hire fewer workers
B) hire more workers.
C) make no adjustments as it is already employing the profit maximizing number of workers.
D) shut down since it is incurring a loss.

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Question 62

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Refer to the information provided in Figure 10.1 below to answer the questions that follow. Figure 10.1 -Refer to Figure 10.1. This firm is currently hiring 16 workers and paying a wage of $10. This firm should

A) do nothing because it is maximizing profits.
B) reduce employment to 15 workers to increase profits.
C) reduce employment to 14 workers to increase profits.
D) increase employment to 17 workers to increase profits.

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Question 63

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Sally's Sandwiches produces sandwiches using one variable input-labor. Sally's Sandwiches is a ________ in the labor market and a ________ in the sandwich market.

When wages increase, the net effect on the level of capital used depends on the relative magnitudes of the factor substitution and output effects.

The demand for ________ is a ʺderived demand.ʺ

Pure rent is the return to any factor of production that is in fixed supply.

A decrease in the wage rate will change

MPL multiplied by PX is the ________ while the wage rate is the ________, where L denotes labor and X denotes output.

If land becomes more valuable in residential use than in commercial use,

An increase in labor productivity would cause a rightward shift of the labor demand curve.

According to the output effect of a labor price decrease, when supply of labor increases, firms eventually increase output and demand for all inputs.

Refer to the data provided in Table 10.2 below to answer the following questions. Table 10.2 $\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$ -Refer to Table 10.2. Marginal revenue product of the ________ worker is $120.

The marginal cost of a unit of labor in a perfectly competitive labor market is

Refer to the data provided in Table 10.2 below to answer the following questions. Table 10.2 $\begin{array} { c c c } \begin{array} { c } \text { Total Labor Units } \\\text { (employees) }\end{array} & \begin{array} { c } \text { Total Product } \\\text { (frames per day) }\end{array} & \begin{array} { c } \text { Price per } \\\text { Frame }\end{array} \\\hline 0 & 0 & \$ 10 \\1 & 10 & \$ 10 \\2 & 30 & \$ 10 \\3 & 55 & \$ 10 \\4 & 70 & \$ 10 \\5 & 82 & \$ 10\end{array}$ -Refer to Table 10.2. Marginal revenue product of the ________ worker is $250.

Labor is a firm's only variable input. The firm should hire additional units of labor as long as the wage is less than or equal to the marginal revenue product of that additional unit of labor.

Productivity of an input is the amount of output produced per unit of input.

The number of seats available in a stadium is fixed at 80,000. The equilibrium price for a ticket to a football game at the stadium is $30. The equilibrium price for a ticket to a baseball game at the stadium is $20. Which of the following is true?

An increase in the productivity of a factor of production will

If the MRP of land is less than its price, a firm should

When a firm substitutes away from a factor whose price has risen and toward a factor whose price has fallen, it is an example of the