Question 1

Choose the statement that is incorrect.

Accepted Answer

E

Question 2

Choose the statement that is incorrect.

Accepted Answer

This statement is incorrect because while some capital services may be traded in a market (such as equipment leasing), not all capital services are traded. For example, the services provided by a company's own factory or machinery are not traded in a market, but are used internally by the firm.

Question 3

To maximize profit,a firm hires labour until

Accepted Answer

The concept of a "value of marginal product" (VMP) is the additional revenue generated by hiring one additional unit of labor. As long as the VMP is greater than the wage rate, the firm can increase its profits by hiring more labor. Once the wage rate equals the VMP, the firm would not be able to increase its profits any further by hiring additional labor as the cost of hiring an additional worker would equal the additional benefit received from them. Therefore, hiring labor until the point where the VMP equals the wage rate is the optimal point for maximizing profits.

Question 4

Profit is the factor price for

Accepted Answer

Profit is the return to entrepreneurship or the management of a business. It is not a factor price for land, capital or labor, but rather a reward for taking risks and innovating. Capital, land, and labor are all factor prices, but not profit.

Question 5

Use the table below to answer the following questions.
Table 18.2.1
 
-Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

Accepted Answer

To find the profit-maximizing number of workers, we need to find the quantity of output that each worker produces, the total revenue generated by selling that output, and the total cost of production. From the table, we see that the output per worker is 10 units, meaning that if there are n workers, the total output is 10n. At a price of $5 per unit, the total revenue is therefore 5(10n) = 50n.
The total cost of production depends on the wage rate and the number of workers. If the wage rate is $30 and there are n workers, the total wage cost is 30n. Adding in the fixed cost of $100, the total cost is therefore 30n + 100.
To maximize profits, we need to find the value of n that maximizes the profit function:
Profit = Total Revenue - Total Cost
Profit = 50n - (30n + 100)
Profit = 20n - 100
To find the value of n that maximizes this function, we take the derivative and set it equal to zero:
dProfit/dn = 20
Setting this equal to zero, we get n = 5.
Therefore, the profit-maximizing number of workers is 5.

Question 6

Use the table below to answer the following questions.
Table 18.2.1
 
-Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $4 a unit,what is the profit-maximizing number of workers if the wage rate is $12?

Accepted Answer

The answer of Use the table below to answer the...

Question 7

The value of marginal product of labour is the revenue

Accepted Answer

The value of marginal product of labor is the additional revenue generated by employing an additional unit of labor. It is calculated by taking the change in total revenue divided by the change in labor input. Therefore, choice C is correct as it specifically mentions the additional revenue generated by the employment of an additional unit of labor.

Question 8

Suppose a gift shop in Corner Brook Newfoundland hires workers to personalize ornaments for Christmas.The store sells the personalized ornaments for $6 each.The value of marginal product of this store's fourth worker is $60.The marginal product of the fourth worker is

Accepted Answer

The value of marginal product of the fourth worker is $60, which means that the store earns an additional $60 by hiring the fourth worker. Since each ornament sells for $6, the fourth worker must have produced an additional 10 ornaments ($60/$6). Therefore, the marginal product of the fourth worker is 10 ornaments. Choice B is the closest option to this answer.

Question 9

If marginal product of a restaurant employee is 10 customers per hour,and the price of a meal is $15,the restaurant employee's value of marginal product is

Accepted Answer

The value of marginal product is calculated by multiplying the marginal product of the employee (10 customers per hour) by the price of a meal ($15). Therefore, 10 customers * $15/meal = $150.

Question 10

Natural resources that are depleted as they are used

Accepted Answer

Natural resources that are depleted as they are used are called nonrenewable natural resources. Examples include fossil fuels such as coal, oil, and natural gas. These resources are finite and cannot be replaced once they are used up. Therefore, it is important to conserve and use these resources wisely, as they will not be available for future generations to use.

Question 11

Coal is an example of

Accepted Answer

Coal is a nonrenewable natural resource because it is formed over millions of years from the remains of dead plants and animals, and it cannot be replenished in a short amount of time.

Question 12

Firms hire labour

Accepted Answer

The primary reason why firms hire labour is to maximize profit. This is because labour is a key input in the production process and hiring labour allows firms to increase their output and generate more revenue. Ultimately, the goal of any firm is to maximize their profits, and labour is an important tool for achieving this goal. Choices A and E are related to cost minimization, but do not fully capture the primary reason why firms hire labour. Choice B is not a valid reason for hiring labour and choice D does not provide a clear explanation for why firms would hire labour over capital.

Question 13

Choose the statement that is correct.

Accepted Answer

All of the statements are correct. A defines labour services, B defines labour market, C defines the price of labour services, and D mentions job contracts which is a common way of trading labour services.

Question 14

Use the table below to answer the following questions.
Table 18.2.1
 
-Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the value of marginal product of the 6th worker?

Accepted Answer

To find the value of the marginal product of the 6th worker, we need to calculate the total product of the 6th worker (TP6) and subtract the total product of the 5th worker (TP5). From the table, we can see that TP6 is 55 and TP5 is 50. Therefore, the marginal product of the 6th worker is 5 units.

Next, we need to calculate the value of the marginal product (VMP). VMP is calculated as price multiplied by marginal product. The price is given as $5 a unit. Therefore, VMP equals 5*5 = $25.

Since the VMP is positive, it means that hiring the 6th worker is profitable for the firm. The best choice, in this case, is to hire the 6th worker.

Question 15

The four factors of production are

Accepted Answer

The four factors of production are labor (human effort), capital (money or machinery needed for production), entrepreneurship (the ability to organize and manage factors of production), and land (natural resources).

Question 16

To maximize profit,the firm must equate the

Accepted Answer

To maximize profit, the firm should hire workers until the value of the marginal product of labor equals the wage rate. This is known as the profit-maximizing level of employment. Option C states that the value of the marginal product (VMP) should equal the factor price (wage rate), which aligns with this logic. The other options either do not consider the concept of marginal product or do not directly relate to profit maximization.

Question 17

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

Accepted Answer

The answer of The Brown's Egg store in Lethbridge Alberta...

Question 18

Water from the Mackenzie River is an example of

Accepted Answer

The Mackenzie River provides water, which is a natural resource that can be used repeatedly. Therefore, it is a renewable resource.

Question 19

An example of a nonrenewable natural resource is

Accepted Answer

Oil is a nonrenewable natural resource because it takes millions of years to form and once it is extracted, it cannot be replaced at the same rate it is consumed.

Question 20

If the marginal product of a baker is 10 loaves of bread,and the price of a loaf of bread is $2,the baker's value of marginal product is

Accepted Answer

The value of marginal product is calculated by multiplying the marginal product by the price of the output. Therefore, the baker's value of marginal product is 10 loaves of bread x $2 per loaf = $20.00.

Quiz 18: Markets for Factors of Production

Choose the statement that is incorrect.

Choose the statement that is incorrect.

To maximize profit,a firm hires labour until

Profit is the factor price for

Use the table below to answer the following questions. Table 18.2.1 -Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

Use the table below to answer the following questions. Table 18.2.1 -Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $4 a unit,what is the profit-maximizing number of workers if the wage rate is $12?

The value of marginal product of labour is the revenue

Suppose a gift shop in Corner Brook Newfoundland hires workers to personalize ornaments for Christmas.The store sells the personalized ornaments for $6 each.The value of marginal product of this store's fourth worker is $60.The marginal product of the fourth worker is

If marginal product of a restaurant employee is 10 customers per hour,and the price of a meal is $15,the restaurant employee's value of marginal product is

Natural resources that are depleted as they are used

Coal is an example of

Firms hire labour

Choose the statement that is correct.

Use the table below to answer the following questions. Table 18.2.1 -Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the value of marginal product of the 6th worker?

The four factors of production are

To maximize profit,the firm must equate the

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

Water from the Mackenzie River is an example of

An example of a nonrenewable natural resource is

If the marginal product of a baker is 10 loaves of bread,and the price of a loaf of bread is $2,the baker's value of marginal product is