Question 1

A formerly quiet town with fantastic weather becomes "the place" to live for people from colder climates.We can expect the rental price of land to __________ land to be devoted to housing.

Accepted Answer

As more people move to the town, the demand for housing will increase, leading to an increase in the rental price of land. Additionally, as more land is devoted to housing to accommodate the influx of people, the total amount of land available for other uses will decrease, further driving up the price of land for housing.

Question 2

A firm is currently using two inputs: labor and capital.It rents equipment for $1,000,which produces a value of the marginal product of $5,000.It hires workers at $10 an hour who produce a value of the marginal product of $100.The wages of workers rise by 20% and the rental price of capital increases by 25%.The firm should hire __________ labor and __________ capital.

Accepted Answer

With a 20% increase in wages, the new marginal product of labor is $120. This means that labor has become more expensive but more productive. Therefore, the firm should hire more labor. 
With a 25% increase in rental price, the new marginal product of capital is $4,000. This means that capital has become more expensive and less productive. Therefore, the firm should use less capital. Overall, the firm should hire more labor and use less capital, which corresponds to choice B.

Question 3

You know that the rental price of capital is $3,000,the rental price of land is $2,000,and the wage of labor is $100.The value of the marginal product produced by each factor is $30,000,$4,000,and $200,respectively.You would advise the company to hire more:

Accepted Answer

The answer of You know that the rental price of...

Question 4

If there is a massive wave of immigration,the wages of workers __________ and it is more profitable for firms to use more __________.

Accepted Answer

The answer of If there is a massive wave of...

Question 5

Your friend Sue tells you that if she gets a raise,she is going to start working less.Your other friend Emma says that the plan is crazy and that Sue should work more so she can earn more money.Which friend is right?

Accepted Answer

The answer of Your friend Sue tells you that if...

Question 6

Lakeside Tubing knows that its total product schedule is as follows.It currently rents an inner tube for $5.Graph the labor demand curve.

Accepted Answer

The answer of Lakeside Tubing knows that its total product...

Question 7

Assume that the Vian Company is renting capital and hiring labor such that the bang per buck from each resource is the same.If wages of labor increase,its use of labor __________ and capital __________.

Accepted Answer

If the bang per buck for labor and capital is the same, an increase in wages of labor will make the cost of using labor relatively more expensive than using capital. Therefore, the company is likely to substitute labor for capital and use less labor and more capital. Hence, the use of labor falls while the use of capital increases.

Question 8

Joe has several different offers for his land,which is located in the city center.He currently rents the land to a community-supported agriculture (CSA)farm for $5,000 per month.The city is offering a yearly rent payment of $12,000,to be paid in monthly installments,to put in a city park.Calculate the economic rent Joe is earning and use it to decide whether he should rent his land to the city.

Accepted Answer

The answer of Joe has several different offers for his...

Question 9

Mary recently opened her own styling salon.After the first month of operation,she looks at the mix of inputs she is using to see whether she should make any changes.The value of marginal product of her stylists is $125,000,and their wage is $20.Her equipment and salon space produces a value of $250,000,and it costs $400 to rent it.The land,which she rents at $800,produces a value of $300,000.Should she change her input mix or is she maximizing profit with her current arrangement?

Accepted Answer

The answer of Mary recently opened her own styling salon.After...

Question 10

Assume that the labor market for coffee roasters is in equilibrium. a.Graph this labor market. b.A new ad campaign by the coffee industry,"A coffee a day keeps the sleepies away," is successful and consumers prefer more coffee.Graph the effect of this on equilibrium wages W₁ and quantity of labor L₁ of workers.Label the new equilibrium W₂ and L₂. c.At the old W₁,what situation exists? How does the labor market adjust to the new W₂?

Accepted Answer

The answer of Assume that the labor market for coffee...

Question 11

It is profitable for a Jack's Jingles to use more equipment in the production of its songs when the:

Accepted Answer

When the rental price of capital decreases, it becomes cheaper for Jack's Jingles to use more equipment in the production of its songs. This is because the cost of renting the equipment has decreased, making it more profitable to use more equipment.

Question 12

If demand for land increases,the rental price __________ and the equilibrium amount of land __________.

Accepted Answer

When demand for land increases, the rental price increases due to higher demand. However, the supply of land is fixed, so the equilibrium amount of land stays the same.

Question 13

The labor market for doctors can be represented with the following two equations: L_S =5 + 3W L_D = 30 - 2W Graph this labor market,highlighting equilibrium wages W* and quantity of labor L*.Label the wages where a shortage and a surplus would exist if the wage deviates from W*.

Accepted Answer

The answer of The labor market for doctors can be...

Question 14

You and your friend get into an argument when she finds out that you earn more than she does.She says it isn't fair,but you argue that there are many reasons why you legitimately earn more.Explain two possible reasons in detail.

Accepted Answer

The answer of You and your friend get into an...

Question 15

Companies can rent a manufacturing robot named RoboMan for $2,500 a month and must pay workers $20 an hour.The value of the marginal product of Roboman is $5,000,and the value of the marginal product of labor is $20.Companies should hire __________ RoboMen and __________ workers.

Accepted Answer

The company should hire more RoboMen because the value of the marginal product of RoboMan ($5,000) is greater than the cost of renting it ($2,500). The company should hire fewer workers because the value of the marginal product of labor ($20) is equal to the cost of hiring workers ($20 per hour). Maximizing profits requires hiring factors of production up to the point where their marginal product equals their cost. Thus, the company should hire more RoboMen and fewer workers to increase profits.

Quiz 14: The Demand and Supply of Resources

A formerly quiet town with fantastic weather becomes "the place" to live for people from colder climates.We can expect the rental price of land to __________ land to be devoted to housing.

You know that the rental price of capital is $3,000,the rental price of land is $2,000,and the wage of labor is $100.The value of the marginal product produced by each factor is $30,000,$4,000,and $200,respectively.You would advise the company to hire more:

If there is a massive wave of immigration,the wages of workers and it is more profitable for firms to use more .

Your friend Sue tells you that if she gets a raise,she is going to start working less.Your other friend Emma says that the plan is crazy and that Sue should work more so she can earn more money.Which friend is right?

Lakeside Tubing knows that its total product schedule is as follows.It currently rents an inner tube for $5.Graph the labor demand curve.

Assume that the Vian Company is renting capital and hiring labor such that the bang per buck from each resource is the same.If wages of labor increase,its use of labor and capital .

It is profitable for a Jack's Jingles to use more equipment in the production of its songs when the:

If demand for land increases,the rental price and the equilibrium amount of land .

The labor market for doctors can be represented with the following two equations: L_S =5 + 3W L_D = 30 - 2W Graph this labor market,highlighting equilibrium wages W* and quantity of labor L.Label the wages where a shortage and a surplus would exist if the wage deviates from W.

You and your friend get into an argument when she finds out that you earn more than she does.She says it isn't fair,but you argue that there are many reasons why you legitimately earn more.Explain two possible reasons in detail.

Companies can rent a manufacturing robot named RoboMan for $2,500 a month and must pay workers $20 an hour.The value of the marginal product of Roboman is $5,000,and the value of the marginal product of labor is $20.Companies should hire RoboMen and workers.

Quiz 14: The Demand and Supply of Resources

A formerly quiet town with fantastic weather becomes "the place" to live for people from colder climates.We can expect the rental price of land to __________ land to be devoted to housing.

You know that the rental price of capital is $3,000,the rental price of land is $2,000,and the wage of labor is $100.The value of the marginal product produced by each factor is $30,000,$4,000,and $200,respectively.You would advise the company to hire more:

If there is a massive wave of immigration,the wages of workers __________ and it is more profitable for firms to use more __________.

Your friend Sue tells you that if she gets a raise,she is going to start working less.Your other friend Emma says that the plan is crazy and that Sue should work more so she can earn more money.Which friend is right?

Lakeside Tubing knows that its total product schedule is as follows.It currently rents an inner tube for $5.Graph the labor demand curve.

Assume that the Vian Company is renting capital and hiring labor such that the bang per buck from each resource is the same.If wages of labor increase,its use of labor __________ and capital __________.

It is profitable for a Jack's Jingles to use more equipment in the production of its songs when the:

If demand for land increases,the rental price __________ and the equilibrium amount of land __________.

The labor market for doctors can be represented with the following two equations: LS =5 + 3W LD = 30 - 2W Graph this labor market,highlighting equilibrium wages W* and quantity of labor L*.Label the wages where a shortage and a surplus would exist if the wage deviates from W*.

You and your friend get into an argument when she finds out that you earn more than she does.She says it isn't fair,but you argue that there are many reasons why you legitimately earn more.Explain two possible reasons in detail.

Companies can rent a manufacturing robot named RoboMan for $2,500 a month and must pay workers $20 an hour.The value of the marginal product of Roboman is $5,000,and the value of the marginal product of labor is $20.Companies should hire __________ RoboMen and __________ workers.

If there is a massive wave of immigration,the wages of workers and it is more profitable for firms to use more .

Assume that the Vian Company is renting capital and hiring labor such that the bang per buck from each resource is the same.If wages of labor increase,its use of labor and capital .

If demand for land increases,the rental price and the equilibrium amount of land .

The labor market for doctors can be represented with the following two equations: L_S =5 + 3W L_D = 30 - 2W Graph this labor market,highlighting equilibrium wages W* and quantity of labor L.Label the wages where a shortage and a surplus would exist if the wage deviates from W.

Companies can rent a manufacturing robot named RoboMan for $2,500 a month and must pay workers $20 an hour.The value of the marginal product of Roboman is $5,000,and the value of the marginal product of labor is $20.Companies should hire RoboMen and workers.