Deck 18: The Markets for the Factors of Production

Question 1

In 2015, the total income of all U.S. residents was approximately $16 billion.

Answer 1

False

Question 2

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.

Answer 2

False

Question 3

The demand for computer programmers is inseparably tied to the supply of computer software.

Answer 3

True

Question 4

If a firm is able to charge a higher price for its output, all else equal, the value of the marginal product of labor will decrease to offset the higher price.

Question 5

In 2015, the total income of all U.S. residents was approximately $16 trillion.

Question 6

Stock dividends and interest payments are examples of factors of production.

Question 7

A firm's demand for labor is derived from its decision to supply a good in another market.

Question 8

For competitive firms, the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Question 9

In a competitive market for labor, the equilibrium wage always equals the value of the marginal product.

Question 10

The quantity available of one factor of production can affect the marginal product of other factors.

Question 11

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.

Question 12

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.

Question 13

Land, labor, and capital are examples of factors of production.

Question 14

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

Question 15

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $48.

Question 16

Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $16.

Question 17

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good.

Question 18

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.

Question 19

The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Question 20

The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor.

Question 21

When an individual's income goes up, that individual may choose to supply less labor, resulting in a backward-sloping labor supply curve.

Question 22

From 1960 to 2015, inflation-adjusted wages increased by 165 percent in the U.S., and yet firms more than doubled the amount of labor they employed.

Question 23

Labor supply curves are always upward sloping.

Question 24

The supply of labor in any one market depends on the opportunities available in other markets.

Question 25

An increase in a product's price will shift the labor demand curve for workers who produce that product to the left.

Question 26

The labor supply curve reflects how workers' decisions about the labor-leisure tradeoff respond to changes in the opportunity cost of leisure.

Question 27

Labor-saving technological advances decrease the marginal productivity of labor.

Question 28

If Firm X is a competitive firm in the market for labor, it has little influence over the wage it pays its employees.

Question 29

Labor-augmenting technological advances decrease the marginal productivity of labor.

Question 30

An increase in the wages paid to high-school student who detassle corn will increase the labor supply of high-school students who weed soybean fields, all else equal.

Question 31

In the United States, technological advances help explain persistently rising employment in the face of rising wages.

Question 32

Technological advances can cause the labor demand curve to shift.

Question 33

The opportunity cost of leisure is impossible to measure because we cannot measure leisure time in dollars.

Question 34

The labor-supply curve is affected by the trade-off between labor and leisure.

Question 35

Labor-saving technological advances increase the marginal productivity of labor.

Question 36

An increase in the output price will increase the firm's demand for labor, all else equal.

Question 37

Jessica receives a raise at her current part-time job from $9 to $11 per hour. If her labor supply curve is backward sloping, she will work fewer hours after receiving the pay raise.

Question 38

Labor-augmenting technological advances increase the marginal productivity of labor.

Question 39

The idea that rational employers think at the margin is central to understanding how many units of labor they choose to employ.

Question 40

Ellen receives a raise at her current part-time job from $8 to $10 per hour. If her labor supply curve is upward sloping, she will work fewer hours after receiving the pay raise.

Question 41

Changes in supply and demand in the labor market will cause changes in wages.

Question 42

Firms pay out a portion of their earnings in the form of interest and dividends, and those payments are a portion of the economy's capital income.

Question 43

In general, less productive workers are paid less than more productive workers.

Question 44

Oil field workers' wages are directly tied to the world price of oil.

Question 45

Suppose the supply of capital decreases. As a result, the quantity of capital used in production and the rental price of capital will both fall.

Question 46

An increase in immigration will lower the equilibrium wage, all else held constant.

Question 47

If men's preferences for work change such that more men want to be stay-at-home fathers, the wages paid to men who remain in the workplace would rise, all else equal.

Question 48

As the number of concrete workers in the United States falls, the wage paid to the remaining concrete workers will necessarily fall as well.

Question 49

If the demand for labor in a particular industry increases, the equilibrium wage in that industry will also increase.

Question 50

Average productivity can be measured as total output divided by total units of labor.

Question 51

Profit maximization by firms ensures that the equilibrium wage always equals the value of the marginal product of capital.

Question 52

If the demand for labor decreases and the supply of labor is unchanged, then the opportunity cost of leisure will decrease.

Question 53

Movements of workers from country to country can cause shifts in the labor supply curves for both countries.

Question 54

For a snow-removal business, the capital stock would include inputs such as snow blowers and shovels.

Question 55

When a firm decides to retain its earnings instead of paying dividends, the stockholders necessarily suffer.

Question 56

Capital owners are compensated according to the value of the marginal product of that capital.

Question 57

The rental price of capital is the price a person pays to own the capital indefinitely.

Question 58

If the output price of a product rises, the demand for capital will increase, raising the rental price of capital.

Question 59

Capital income does not include income paid to households for the use of their capital.

Question 60

Increases in productivity are not responsible for increased standards of living in the United States.

Question 61

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good multiplied by the marginal product of the last worker hired.

Question 62

Suppose that the "Millennial" generation values leisure more than past generations. We can expect a decrease in the labor supply as the Millennials enter their prime working ages.

Question 63

In economics, the term capital refers to

A)money.
B)stocks and bonds.
C)equipment and structures used in production.
D)All of the above are correct.

Question 64

Suppose that the "Millennial" generation values leisure more than past generations. We can expect a decrease in the labor supply as the Millennials enter their prime working ages and a corresponding decrease in wages.

Question 65

The marginal product of land depends on the quantity of land that is available.

Question 66

An event that changes the supply of any factor of production can alter the earnings of all the factors.

Question 67

For profit-maximizing, competitive firms, the demand curve for each factor of production equals the value of the marginal product of that factor.

Question 68

Growth in real wage rates is closely tied to growth in labor productivity.

Question 69

According to the neoclassical theory of distribution, the wages paid to workers

A)reflect the market prices of the goods those workers produce.
B)reflect the degree of market power held by the firms that pay those wages.
C)fail to reflect those workers' opportunity costs of leisure.
D)are unrelated to the forces of supply and demand.

Question 70

Suppose that the "Millennial" generation values leisure more than past generations. We can expect a decrease in the labor supply as the Millennials enter their prime working ages and a corresponding increase in wages.

Question 71

Suppose an influenza pandemic were to significantly decrease the population of a country. We would predict a decrease in the marginal product of land in that country.

Question 72

According to the neoclassical theory of distribution, the wages paid to John Deere tractor assembly line workers are higher than those paid to fast food workers because assembly line workers

A)have college degrees, on average, whereas fast food workers usually do not.
B)produce a product of greater market value than do fast food workers.
C)work in a less stressful environment than do fast food workers.
D)are less likely to belong to a labor union than are fast food workers.

Question 73

A monopsony firm in a labor market hires fewer workers than would a competitive firm.

Question 74

Suppose Cassie's Candles is a profit-maximizing competitive firm. Cassie sells hand-made candles for $10 each. She will pay an hourly wage of $20 so long as the marginal productivity of a worker equals or exceeds two candles per hour.

Question 75

The marginal product of land depends only on the quantity of land available.

Question 76

Capital is paid according to the value of its marginal product

A)only if earnings from capital are paid to households in the form of dividends.
B)only if earnings from capital are kept within firms as retained earnings.
C)regardless of whether earnings from capital are paid to households in the form of dividends or whether those earnings are kept within firms as retained earnings.
D)None of the above is correct; unlike labor, capital is a factor of production for which earnings are unrelated to the value of marginal product.

Question 77

According to the neoclassical theory of distribution, the wages paid to workers depend on the

A)supply of labor.
B)demand for labor.
C)marginal productivity of labor.
D)All of the above are correct.

Question 78

U.S. immigrants are less likely to be working than immigrants in other developed countries.

Question 79

The value of the marginal product of capital can be calculated as the marginal product of capital multiplied by the cost of the capital input.

Question 80

The U.S. economy has been very successful in absorbing immigrants and putting them to work.