Question 1

Sally runs a hair styling salon.Sally is a profit-maximizing owner whose firm operates in a competitive market.The marginal cost of a haircut is $11.What is the maximum wage that Sally will pay her stylists?

Accepted Answer

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Question 2

Diane's Auto World installs tires on automobiles,light trucks,and sport utility vehicles.She is a profit-maximizing business owner whose firm operates in a competitive market.The marginal cost of installing a tire is $10.The marginal productivity of the last worker that Diane hired was 2 tires per hour.What is the maximum hourly wage that Diane was willing to pay the last worker hired?

Accepted Answer

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Question 3

When deciding whether to hire an additional worker,firms need only consider how the additional worker would affect

Accepted Answer

When making a decision to hire an additional worker, firms should consider whether the worker will contribute to increasing profits. Hiring an additional worker can increase costs, revenues, and output, but the most important consideration should be the impact on profits. If the additional worker will contribute to increasing profits, then it is worth hiring them.

Question 4

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Accepted Answer

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the market price of the output, as the value of the marginal product is the additional revenue that the input contributes to the firm's total revenue. Therefore, the correct choice is D, the market price of the output.

Question 5

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day.If radios can be sold for $10 each,the value of marginal product of the ninth worker is

Accepted Answer

To find the value of marginal product of the ninth worker, we need to calculate the additional revenue generated by adding the ninth worker.

The marginal product of the ninth worker is the difference between the total product of nine workers (90 radios) and the total product of eight workers (70 radios), which is 20 radios.

Therefore, the additional revenue generated by adding the ninth worker is 20 radios x $10/radio = $200.

Hence, the answer is C.

Question 6

The value of the marginal product of labor is equal to the change in

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Question 7

When a firm experiences diminishing marginal product,what is the shape of the curve that represents the value of the marginal product of labor?

Accepted Answer

When a firm experiences diminishing marginal product, the curve representing the value of the marginal product of labor is downward sloping. This means that each additional unit of labor hired will bring a lower increase in output than the previous unit, resulting in a lower value for the marginal product of labor.

Question 8

Which of the following statements is correct?

Accepted Answer

A) The value of the marginal product curve represents the additional output a firm gets from hiring one more worker. For competitive, profit-maximizing firms, the value of the marginal product of labor equals the price of output produced by that worker times the marginal product of labor. Thus, the value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms.
B) In a competitive market, firms are price takers, meaning they cannot influence the market price. Therefore, the firm hires workers up to the point where the value of the marginal product of labor equals the wage because hiring any more workers would increase costs but not increase revenue (due to the fixed market price). 
C) If the firm hires workers up to the point where the value of the marginal product of labor equals the wage, then the firm is producing where the marginal cost equals the price of output (since each additional worker is paid the wage rate, which is the same as the marginal cost of labor). In a competitive market, this means the firm is producing where price equals marginal cost. 
Therefore, all the above statements are correct.

Question 9

To maximize profit,a competitive firm hires workers up to the point of intersection of the

Accepted Answer

The point of intersection between the value of marginal product curve and the wage line represents the point where the additional revenue generated by hiring one more worker (the value of their marginal product) is exactly equal to the wage paid to that worker. At this point, the firm is maximizing its profit because it is paying each worker exactly what they are worth in terms of their contribution to the firm's output. If the firm were to hire any more workers beyond this point, their marginal product value would be less than the wage paid to them, resulting in a decrease in profits. Therefore, option B is the best choice.

Question 10

If the value of the marginal product of labor is less than the wage,then the firm could

Accepted Answer

If the value of the marginal product of labor is less than the wage, it means that the firm is paying more to hire a worker than the additional output that worker is producing for the firm. Therefore, hiring additional labor would actually decrease the firm's profit. The best option would be to reduce the amount of labor hired, which would reduce the firm's costs and increase profits.

Question 11

If the wage exceeds the value of the marginal product of labor,then hiring another worker

Accepted Answer

When the wage exceeds the value of the marginal product of labor, hiring another worker will increase the firm's total cost more than the additional revenue generated. This will decrease the firm's profit. Therefore, the best answer is D.

Question 12

Paul is the owner of Paul's Popcorn Palace.Paul is a profit-maximizing owner whose firm operates in a competitive market.An additional worker costs Paul $200 and has a marginal productivity of 40 canisters of popcorn.Assuming no other variable costs,what is the marginal cost of a popcorn?

Accepted Answer

Marginal cost is calculated as the increase in total cost from producing one additional unit of output. In this case, the additional worker costs $200 and has a marginal productivity of 40 canisters of popcorn. Therefore, the marginal cost of a canister of popcorn is $200/40 = $5.

Question 13

If the value of the marginal product of labor exceeds the wage,then the firm could

Accepted Answer

If the value of the marginal product of labor exceeds the wage, it means that the additional labor hired will generate more revenue than its cost. Therefore, hiring additional labor will increase the firm's profit.

Question 14

Abdul is trying to convince the owner of a sandwich shop to hire him.He argues that he could help the shop sell an additional five sandwiches per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Accepted Answer

If Abdul can help the shop sell an additional five sandwiches per day at $8 each, he is adding $40 per day to the shop's revenue. Therefore, hiring Abdul would only be profitable if his wage rate is less than $40 per day. Therefore, if the owner does not hire him, it means that the wage rate must be more than $40 per day.

Question 15

For a profit-maximizing,competitive firm,the value of the marginal product of labor

Accepted Answer

The answer of For a profit-maximizing,competitive firm,the value of the...

Question 16

The negative slope of the value of marginal product curve is most easily explained by

Accepted Answer

The negative slope of the value of marginal product curve is due to diminishing marginal product, which means that as additional workers are hired, the marginal product of labor decreases. This occurs because additional workers may have less space, equipment or other resources to work with, or because of coordination challenges, among other factors, which lead to each additional worker adding less output than the previous one.

Question 17

If the value of the marginal product of labor exceeds the wage,then hiring another worker increases the firm's

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Question 18

A worker's contribution to a firm's revenue is measured directly by the worker's

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Question 19

Linda's Autoplex performs oil changes on automobiles,light trucks,and sport utility vehicles.She is a profit-maximizing business owner whose firm operates in a competitive market.The marginal cost of an oil change is $20.The marginal productivity of the last worker that Linda hired was 1.5 oil changes per hour.What is the maximum hourly wage that Linda was willing to pay the last worker hired?

Accepted Answer

The maximum hourly wage Linda is willing to pay is equal to the marginal revenue product of labor, which is the marginal productivity of labor (1.5 oil changes per hour) multiplied by the marginal cost of an oil change ($20). Thus, 1.5 * $20 = $30.

Question 20

Value of marginal product is defined as the additional

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Quiz 18: The Market For the Factors of Production.