Deck 16: The Factors of Production

Question 1

If the demand for oranges falls,as a result,it is highly likely that the demand for:

A) orange juice will fall.
B) orange grove workers will fall.
C) apples will increase.
D) apple orchard workers will decrease.

Answer 1

B

Question 2

The marginal product of any input into the production process is the:

A) increase in output that is generated by an additional unit of input.
B) decrease in input that is generated by an additional unit of output.
C) constant ratio of inputs to outputs.
D) ratio total output divided by total quantity.

Answer 2

A

Question 3

The factor of production called "land" can be defined as the:

A) earth and anything naturally occurring on or in it used to produce goods and services.
B) area of the earth exchanged in the real estate market by businesses.
C) fraction of total costs spent on rent, lease, or mortgage.
D) earth and any structures on it that are used to produce goods and services.

Answer 3

A

Question 4

If the demand for hand-sewn leather shoes increases,it is highly likely the demand for:

A) leather will decrease.
B) skilled sewers will increase.
C) needle and thread will decrease.
D) all shoe-types will also increase.

Question 5

If the demand for hand-sewn leather shoes increases,it is likely the demand for leather will:

A) also increase.
B) decrease slightly.
C) stay the same.
D) drop significantly and producers will use another material.

Question 6

A production function represents the:

A) relative values of the inputs and modes of production.
B) relative costs of the inputs across various modes of production.
C) relationship between the quantity of inputs and the quantity of outputs.
D) relationship between the cost of the inputs and the revenue generated by the outputs.

Question 7

The factors of production are the:

A) ingredients that go into making any good or service.
B) outputs that society as a whole have chosen to produce.
C) costs and benefits of a given production process.
D) list of inputs required for a given durable good.

Question 8

The ingredients that go into making any good or service are called the:

A) output makers.
B) factors of production.
C) factors of output.
D) production ingredients.

Question 9

The factor of production called "labor" can be defined as the:

A) time spent by employees in the production of goods, but not services.
B) fraction of total costs spent on people.
C) number of worker-hours a business uses at a given time.
D) number of people a business has access to at any given time.

Question 10

The increase in output that is generated by an additional unit of input is called the:

A) input-output relationship.
B) production function.
C) resource product.
D) marginal product.

Question 11

The demand for factor inputs:

A) depends upon the markets for the goods that they are used to produce.
B) is referred to as imputed demand.
C) is independent of how much they contribute to the value of the end product.
D) is generally constant across most factor markets.

Question 12

In general,economists place all factors of production into which three categories?

A) Land, labor, and capital
B) Technology, land, and capital
C) Land, labor, and technology
D) Technology, labor, and capital

Question 13

The factor of production called "capital" refers to:

A) manufactured goods that are used to produce new goods.
B) any piece of raw material that is used to produce goods and services.
C) any input that's not a human being or dirt.
D) the amount of money a firm has access in order to run its business.

Question 14

Derived demand:

A) is the sum total of all factors of production for a given good or service.
B) refers to the demand for variable inputs when at least one fixed input exists.
C) refers to the supply decisions of a final good influencing the demand for the inputs needed to make it.
D) is only computed for the long-run demand decisions based on short-run marginal changes.

Question 15

Graphically,we can think of the marginal product of a factor as the:

A) slope of the total production curve, when output is plotted against the quantity of the input that is used.
B) slope of the total cost curve, when output is plotted against the costs of the quantity of the inputs used.
C) additional cost associated with producing one more unit of output.
D) additional inputs associated with producing one more unit of output.

Question 16

If the demand for a good increases,it is likely that the demand for the factors of production used as inputs will:

A) decrease.
B) increase.
C) stay the same.
D) None of these statements is true.

Question 17

The relationship between the quantity of inputs and the quantity of outputs is called a:

A) cost function.
B) production function.
C) profit function.
D) resource function.

Question 18

If the demand for pizza increases,then as a result,it is highly likely that the demand for:

A) chicken nuggets will fall.
B) soda will increase.
C) mozzarella cheese will increase.
D) All of these are a likely result.

Question 19

If the demand for baseballs increases,then as a result,it is highly likely that the demand for:

A) leather will increase.
B) bats will decrease.
C) soccer balls will rise.
D) tennis balls will increase.

Question 20

The demand for factors of production is referred to as:

A) primary demand.
B) derived demand.
C) implied demand.
D) production demand.

Question 21

The question of how much labor a firm will hire comes down to:

A) whether added workers are going to generate more revenue or not.
B) if the added workers are going to add profits to the firm.
C) whether the value of the marginal product is greater than, less than, or equal to the average total cost.
D) the amount of capital that will be required in order to ensure the worker is productive.

Question 22

Which of the following industries would be considered to have a labor intensive production process?

A) Farming in a rich country
B) Working in a factory.
C) Driving a cab.
D) Writing a novel

Question 23

Which of the following industries would be considered to have a labor intensive production process?

A) Printing a novel
B) Farming in a poor country
C) Building a road.
D) Driving a truck.

Question 24

A profit-seeking firm will choose the combination of inputs that:

A) maximizes profit.
B) maximizes costs.
C) has the lowest average variable cost.
D) has the lowest average total cost.

Question 25

A capital intensive production process is one in which:

A) highly specialized capital is needed to produce the good.
B) a part of the production process must be done by capital and cannot be substituted.
C) a lot of capital is hired relative to the total inputs needed to produce the good.
D) total costs will be minimized if capital is the primary factor of production used.

Question 26

Which of the following industries would be considered to have a capital intensive production process?

A) Auto manufacturing
B) Farming in a poor country
C) Writing a novel.
D) Art restoration.

Question 27

All factors of production usually experience:

A) decreasing average variable cost.
B) diminishing marginal productivity.
C) decreasing average fixed costs.
D) diminishing total productivity.

Question 28

The value of the marginal product is the:

A) marginal product generated by an additional unit of input times the price of output.
B) marginal revenue generated by an additional unit of output times the number of workers hired.
C) additional inputs required to produce one more additional unit of output.
D) average revenue generated by workers at a firm.

Question 29

The marginal product generated by an additional unit of input times the price of the output is called:

A) the value of the marginal product.
B) the marginal revenue product.
C) Both of these statements are true.
D) Neither of these statements is true.

Question 30

In the graph of supply and demand in the market for labor:

A) individuals make up the demand curve.
B) the equilibrium price of labor is generally denoted as L*.
C) firms provide the demand.
D) equilibrium is rarely achieved.

Question 31

Which of the following has a production process that would be considered labor intensive?

A) Hairstyling services
B) Farming in a rich country
C) T-shirt production
D) Road construction.

Question 32

Holding other things constant,diminishing marginal productivity happens to:

A) any input, the more the input is hired.
B) labor, the more labor is hired, but not to land or capital.
C) capital inputs, the more is hired, but not to labor or land.
D) all inputs with the exception of land, the more those inputs are hired.

Question 33

The question of how much labor a firm will hire comes down to:

A) whether added workers are going to generate more revenue than what it costs to hire them.
B) if the added workers are going to add revenues to the firm.
C) whether the value of the marginal product is greater than, less than, or equal to the average total cost.
D) the healthcare costs they incur by hiring them.

Question 34

Farming in poor countries is considered to be ___________ intensive because __________.

A) labor; labor is typically relatively cheaper than machinery in poor countries
B) capital; the labor used is concentrated, spread thinly across a lot of capital
C) labor; the tools in poor countries are more plentiful than the people
D) capital; the tools in poor countries are relatively cheaper than the cost of using people in poor countries

Question 35

A profit-seeking firm will choose the combination of inputs that maximizes profit,based on the:

A) ratio of each factor of production.
B) substitutability of each factor of production.
C) local price of each factor of production.
D) total productivity of each factor of production.

Question 36

Which of the following has a production process that would be considered capital intensive?

A) A chorale
B) Police detective work
C) Auto manufacturing
D) Serving food at a restaurant.

Question 37

Farming in poor countries is considered to be:

A) capital intensive.
B) labor intensive.
C) production intensive.
D) cost intensive.

Question 38

Which of the following industries would be considered to have a capital intensive production process?

A) Creating a painting.
B) Farming in a rich country
C) Creating a hand-crafted wine.
D) Serving food at a restaurant.

Question 39

In the market for labor:

A) individuals make up the demand.
B) firms create the supply.
C) the price in the market is the wage.
D) individuals are never paid above their productivity.

Question 40

A labor intensive production process is one in which:

A) a lot of labor is hired relative to the total inputs needed to produce the good.
B) highly skilled labor is needed to produce the good.
C) a part of the production process must be done by labor and cannot be substituted.
D) total costs will be minimized if labor is the primary factor of production used.

Question 41

A person will choose to work another hour if the benefit of another hour of work is:

A) greater than the opportunity cost.
B) exactly equal to the opportunity cost.
C) less than the opportunity cost.
D) exactly equal to the average total cost to the firm.

Question 42

Graphing the value of marginal product against the quantity of a given input hired looks like which of the following curves?

A) The total product curve
B) The total revenue curve
C) The demand curve
D) The value product curve

Question 43

When individuals are debating whether to supply labor,they think about all of the following except:

A) the cost in terms of forgone leisure.
B) the benefit of more income for each hour worked.
C) whether the benefits outweigh the costs.
D) the level of profits they bring to the firm.

Question 44

When the competitive firm's value of the marginal product of labor intersects the market-wage level,the firm:

A) can increase its profits by hiring any amount less than this point.
B) can increase its profits by hiring any amount greater than that point.
C) should consider shutting down since it is not earning profits.
D) has found the profit-maximizing quantity of labor to hire.

Question 45

For a competitive firm,the marginal revenue product is:

A) always positive and nears zero as quantity increases.
B) always negative and nears zero as quantity increases.
C) zero when profits are maximized.
D) decreasing eventually as quantity increases.

Question 46

Sadie is getting ready to go to work where she earns $70 a day as a day laborer.Her friend Caroline calls her and asks her to go swimming with sharks for the day.Sadie decides to go with her.Sadie's choice implies that her opportunity cost of working is:

A) less than $70.
B) greater than $70.
C) equal to $70.
D) Cannot say without more information.

Question 47

The competitive firm's profit-maximizing quantity of labor is the quantity where the:

A) quantity of the marginal product of labor is equal to the market wage.
B) value of the marginal product of labor is equal to the market wage.
C) quantity of the marginal product of labor is equal to zero.
D) value of the marginal product of labor is equal to the profit.

Question 48

When the benefit of another hour of work is greater than the opportunity cost,we would expect the worker to work:

A) another hour.
B) an hour less.
C) exactly that amount.
D) Cannot be determined without more information.

Question 49

Grace is headed to work at a catering business as a waitress for $100.Her sister Paige calls and asks her to go horseback riding instead.Grace decides to go to work,which implies Grace's opportunity cost of working is:

A) greater than $100.
B) less than $100.
C) equal to $100.
D) no more than $100.

Question 50

We think about the cost of supplying labor as the:

A) opportunity cost of the individual's time.
B) input costs that go into producing a unit of labor.
C) average wage in the labor market.
D) the additional equipment and training that is required when hiring a person.

Question 51

Claire is on her way to her job at a call center where she was planning on spending three hours.She can drop in and work any hour she wants to and earn $12 per hour.Her friend calls and invites her to spend the next three hours bungee jumping.Claire decides to go with her friend,which tells us Claire's opportunity cost of working for three hours is:

A) greater than $36.
B) greater than $12.
C) less than $36.
D) less than $12.

Question 52

For a competitive firm,the value of output ___________ and the marginal product of labor ___________ with each additional worker hired.

A) stays constant; decreases
B) increases; decreases
C) increases; increases
D) decreases; stays constant

Question 53

By comparing the value of marginal product with the marginal cost per input,a firm can find the:

A) cost-maximizing quantity to hire.
B) profit-maximizing quantity to hire.
C) revenue-maximizing quantity to hire.
D) output-maximizing quantity to hire.

Question 54

A worker will become indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

A) greater than the opportunity cost.
B) exactly equal to the opportunity cost.
C) less than the opportunity cost.
D) constant for each additional hour worked.

Question 55

Eli is headed to his job harvesting grapes at a local vineyard.He earns $8 every hour he works there.His friend calls him and asks him to go mountain biking for the next 2 hours instead.Eli cannot decide between the two activities.His indecision implies he values riding his mountain bike for two hours:

A) more than $16.
B) less than $16.
C) at exactly $16.
D) at no more than $8.

Question 56

In economics,the term "leisure" refers to:

A) nonwork activities that individuals enjoy doing.
B) those activities that individuals enjoy doing.
C) all nonwork activities.
D) the vacation time on receives when working.

Question 57

In the market for labor:

A) firms create the supply.
B) the price in the market is the interest rate.
C) individuals are the sellers of the good.
D) there is never disequilibrium.

Question 58

At the competitive firm's profit-maximizing quantity of labor:

A) the value of the last worker's marginal product is greater than or equal to marginal cost of that input.
B) the value of the last worker's marginal product is less than the marginal cost of that input.
C) marginal profits are always positive.
D) the average product of labor is equal to the wage rate.

Question 59

For a competitive firm,the value of the marginal product:

A) increases for each additional worker.
B) remains constant across workers.
C) decreases for each additional worker.
D) is zero when profits are maximized.

Question 60

The curve formed by plotting the value of the marginal product for workers against quantity of labor is:

A) downward sloping.
B) upward sloping.
C) perfectly elastic, for competitive firms.
D) perfectly inelastic.

Question 61

The decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income is called the:

A) income effect.
B) price effect.
C) substitution effect.
D) labor effect.

Question 62

If the price effect outweighs the income effect of a wage increase,the labor-supply curve will:

A) slope downward.
B) slope upward.
C) be perfectly horizontal.
D) be perfectly flat.

Question 63

The income effect describes the:

A) increase in the quantity of labor supplied in response to a higher wage.
B) decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
C) decrease in the quantity of labor supplied in response to a lower wage.
D) increase in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.

Question 64

A decrease in the quantity of labor supplied in response to a higher wage would be due to the:

A) substitution effect.
B) price effect.
C) income effect.
D) tax effect.

Question 65

In general,as wages increase:

A) people are willing to work less.
B) people are willing to work more.
C) it does not affect people's willingness to work.
D) the benefit of working goes down.

Question 66

Eli can decide between two jobs.One job is harvesting grapes at a local vineyard.He would earn $8 every hour he works there.He could also earn $7 an hour working as a bagger at the local grocery.Assuming Eli can only choose between these 2 jobs and that the benefits of both jobs are the same.If Eli decides to work at the grocery store as a bagger the opportunity cost every hour he decides to work at the grocery is:

A) more than $8.
B) less than $8.
C) exactly $8.
D) exactly $7.

Question 67

If the income effect outweighs the price effect of a wage increase,the labor-supply curve will:

A) slope upward.
B) slope downward.
C) be perfectly flat.
D) be perfectly horizontal.

Question 68

Which of the following would be considered a "leisure" activity by economists?

A) Mopping the floor at McDonald's for minimum wage
B) Mopping your kitchen floor
C) Folding sweaters while working at the Gap
D) None of these activities would be considered leisure.

Question 69

The price effect describes the:

A) decrease in the quantity of labor supplied in response to a higher wage.
B) increase in the quantity of labor supplied in response to a lower wage.
C) increase in the quantity of labor supplied in response to a higher wage.
D) increase in the quantity of labor demanded in respond to a higher wage.

Question 70

The increase in the quantity of labor supplied in response to a higher wage is called the:

A) price effect.
B) labor effect.
C) income effect.
D) substitution effect.

Question 71

Eli is headed to his job harvesting grapes at a local vineyard.He earns $8 every hour he works there.He could also earn $7 an hour working as a bagger at the local grocery.Assuming Eli can only choose between these 2 jobs and that the benefits of each job are the same.Eli’s opportunity cost every hour he decides to work at his harvesting job is:

A) more than $7.
B) less than $7.
C) exactly $7.
D) more than $7.

Question 72

The market labor-supply curve is:

A) upward sloping.
B) downward sloping.
C) perfectly elastic.
D) perfectly inelastic.

Question 73

The labor-supply curve will be downward sloping if the:

A) income effect outweighs the price effect.
B) price effect outweighs the income effect.
C) substitution effect outweighs the income effect.
D) The labor-supply curve is never downward sloping.

Question 74

Which of the following would be considered a "leisure" activity by economists?

A) Driving an on-duty taxi.
B) Driving to the movies.
C) Driving a forklift for work.
D) Driving a bus for a city.

Question 75

The labor supply could decrease when wages increase only if the:

A) price effect outweighs the income effect.
B) income effect outweighs the price effect.
C) substitution effect outweighs the income effect.
D) price effect outweighs the substitution effect.

Question 76

If the price effect outweighs the income effect of a wage increase,the quantity of labor supplied will:

A) increase.
B) decrease.
C) remain the same.
D) be negative.

Question 77

The market labor-supply curve has all of the following properties except it:

A) is always upward sloping.
B) reflects people's willingness to work more when wages are higher.
C) shows the relationship between the price of labor and the quantity supplied.
D) shifts with changes in the opportunity cost for work

Question 78

In general,as wages go up:

A) people are willing to work less.
B) the opportunity cost of leisure goes up.
C) the opportunity cost of leisure goes down.
D) people will always work more.

Question 79

Which of the following would not be considered a "leisure" activity by economists?

A) Making dinner
B) Going skiing
C) Cleaning the bathroom floor
D) Making a work call.

Question 80

If the income effect outweighs the price effect of a wage increase,the quantity of labor supplied will:

A) increase.
B) decrease.
C) remain constant.
D) drop to zero.