Question 1

If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will

Accepted Answer

If demand for a product increases while supply decreases, this indicates a shortage in the market, causing the equilibrium price to increase. As a result, the marginal revenue product curve will shift to the right to reflect the higher price and increased demand for the product.

Question 2

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, and the farmer employs eight workers. If the farmer is maximizing his profits, then the marginal product of the eighth worker is ________.

Accepted Answer

In order to maximize profits, the farmer should continue to hire workers until the marginal product of the last worker hired (MPL) equals the ratio of the price of the output (P) to the wage rate (W). In this case, MPL = P/W = 6/30 = 0.2 bushels. However, the farmer has already hired seven workers, and thus the marginal product of the eighth worker must be the difference between the total output produced by eight workers and the total output produced by seven workers. Unfortunately, we do not have enough information to calculate these figures and determine the exact marginal product of the eighth worker. Therefore, the answer is indeterminate from the given information.

Question 3

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 4 bushels. What would you advise this farmer to do?

Accepted Answer

The answer of A soybean farmer sells soybeans in a...

Question 4

In ________, changes in technology affect the marginal revenue product of a unit of labor input. In ________, changes in technology affect the marginal cost of a unit of output.

Accepted Answer

In the labor market, technological advancements can increase the productivity of labor, thereby affecting the marginal revenue product of labor. In the product market, technological changes can influence the production process, impacting the marginal cost of producing a unit of output.

Question 5

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 7 bushels. What would you advise this farmer to do?

Accepted Answer

The farmer should increase employment because the marginal product of the last worker hired is greater than the wage rate, indicating that the farmer can increase profits by hiring additional workers. This is because the additional worker is contributing more to total output than their wage cost.

Question 6

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $10 a bushel, the wage rate is $15, the farmer employs eleven workers and the marginal product of the eleventh worker is 18. What would you advise this farmer to do?

Accepted Answer

Since the market price of soybeans is $10 a bushel and the marginal product of the last worker hired is 18, the marginal revenue product of labor is $180 (18 x $10). Since the wage rate is only $15, the farmer can hire an additional worker and still earn a profit of $165 ($180 - $15) from the additional output generated. Therefore, it would be profitable for the farmer to increase employment.

Question 7

If product demand decreases and product price decreases

Accepted Answer

If product demand decreases and product price decreases, it means that the marginal revenue product (MRP) of the input will also decrease. This will cause the MRP curve to shift to the left. The firm will then need to hire fewer units of the input in order to maximize their profits.

Question 8

Related to the Economics in Practice on page 211: According to the Economics in Practice, firms where managers had ________ extensive training became ________ productive than firms where managers had no training.

Accepted Answer

According to the Economics in Practice on page 211, firms where managers had more extensive training became more productive than firms where managers had no training.

Question 9

If the wage rate is greater than the marginal revenue product of labor, the firm should ________ to maximize profits.

Accepted Answer

If the wage rate is greater than the marginal revenue product of labor, it means that the firm is paying more to its employees than the value they are producing for the company. This results in the firm incurring losses rather than making profits. Therefore, the best choice for the firm is to reduce the amount of labor they hire and thus produce less output to minimize their losses. Hence the correct answer is A - hire less labor and produce less output.

Question 10

If the individual labor supply curves for all workers in a given location slope up, the market supply curves in that location

Accepted Answer

The market supply curve represents the total quantity of labor supplied by all workers in the market at different wage rates. If all individual labor supply curves slope up, it means that as the wage rate increases, each individual is willing to supply more labor. This would result in the market supply curve also sloping up, reflecting the greater quantity of labor supplied by all workers in response to higher wages.

Question 11

Assuming that labor is the only variable input, if society values a good ________ it costs firms to hire the workers to produce that good, the good ________ be produced.

Accepted Answer

If society values a good less than it costs firms to hire the workers to produce that good, firms will not produce it because it would not be profitable to do so.

Question 12

The marginal revenue product of labor curve will always shift to the left if

Accepted Answer

The marginal revenue product of labor curve shifts to the left when product demand decreases and product price decreases because the value of the additional output produced by labor falls, making employers less willing to pay for additional labor.

Question 13

Assume that automobiles are a normal good. A decrease in income will

Accepted Answer

Since automobiles are a normal good, a decrease in income will lead to a decrease in the demand for automobiles. This decrease in demand will, in turn, reduce the value of the marginal product of auto workers, shifting the marginal revenue product curve of auto workers to the left.

Question 14

The law of diminishing marginal returns explains why a marginal revenue product schedule

Accepted Answer

The law of diminishing marginal returns states that as one input is increased while other inputs are held constant, the marginal product of the variable input will eventually decline. As a result, the marginal revenue product schedule will also eventually decline, making D the correct choice.

Question 15

A firm's ________ curve in a perfectly competitive product market is the same as its supply curve. Similarly, a firm's ________ curve in a perfectly competitive labor market is the same as its demand curve.

Accepted Answer

In a perfectly competitive product market, a firm's supply curve is its marginal cost curve, as the firm will produce where marginal cost equals market price. In a perfectly competitive labor market, a firm's demand curve for labor is its marginal revenue product curve, as the firm will hire workers up to the point where the value of the additional output produced by the worker (the marginal revenue product) equals the cost of hiring the worker (the wage).

Question 16

The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.

Accepted Answer

The demand for any factor of production, including labor, in a competitive industry depends on its productivity and the value of its product in the marketplace. This means that not just labor in general, but also capital, technology, and other factors will also impact the industry's demand.

Question 17

An deterioration in technology will cause a marginal revenue product of labor curve to

Accepted Answer

A deterioration in technology would decrease the productivity of labor, leading to a decrease in the marginal revenue product of labor. This would cause the MRPL curve to shift to the left.

Question 18

Where L represents labor and X represents output, MP_L x P_X is the value of labor's marginal product while the wage rate is the

Accepted Answer

The expression given in the question represents the marginal product of labor multiplied by the wage rate. The wage rate represents the cost of a marginal unit of labor, hence the correct answer is B.

Question 19

In theory, if a profit-maximizing firm in a perfectly competitive labor market found it advantageous to hire one less worker, the firm should pay a

Accepted Answer

In a perfectly competitive labor market, the wage rate is determined by the market and is the same for all workers. If a firm decides to hire one less worker, it does not change the wage rate for the remaining workers. The premise of paying a different wage to the most recently hired or to any specific group of workers contradicts the assumption of a perfectly competitive labor market where each worker is paid the same wage rate. However, the correct answer is based on the theoretical scenario provided, which does not align with the typical characteristics of a perfectly competitive labor market. Therefore, the explanation is that in a perfectly competitive labor market, firms do not have the power to set wages; wages are determined by the market. The scenario described does not accurately reflect how wages are adjusted in such markets, making the explanation theoretical rather than practical.

Question 20

Suppose the supply of labor schedule decreases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

Accepted Answer

With the decrease in the supply of labor, the wages will increase. The profit-maximizing firm will react by hiring fewer workers to reduce their labor costs and maintain their profit margin.

Quiz 10: Input Demand: The Labor and Land Markets

If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will

In , changes in technology affect the marginal revenue product of a unit of labor input. In , changes in technology affect the marginal cost of a unit of output.

If product demand decreases and product price decreases

Related to the Economics in Practice on page 211: According to the Economics in Practice, firms where managers had extensive training became productive than firms where managers had no training.

If the wage rate is greater than the marginal revenue product of labor, the firm should ________ to maximize profits.

If the individual labor supply curves for all workers in a given location slope up, the market supply curves in that location

Assuming that labor is the only variable input, if society values a good it costs firms to hire the workers to produce that good, the good be produced.

The marginal revenue product of labor curve will always shift to the left if

Assume that automobiles are a normal good. A decrease in income will

The law of diminishing marginal returns explains why a marginal revenue product schedule

A firm's curve in a perfectly competitive product market is the same as its supply curve. Similarly, a firm's curve in a perfectly competitive labor market is the same as its demand curve.

The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.

An deterioration in technology will cause a marginal revenue product of labor curve to

Where L represents labor and X represents output, MP_L x P_X is the value of labor's marginal product while the wage rate is the

In theory, if a profit-maximizing firm in a perfectly competitive labor market found it advantageous to hire one less worker, the firm should pay a

Suppose the supply of labor schedule decreases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

Quiz 10: Input Demand: The Labor and Land Markets

If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will

In ________, changes in technology affect the marginal revenue product of a unit of labor input. In ________, changes in technology affect the marginal cost of a unit of output.

If product demand decreases and product price decreases

Related to the Economics in Practice on page 211: According to the Economics in Practice, firms where managers had ________ extensive training became ________ productive than firms where managers had no training.

If the wage rate is greater than the marginal revenue product of labor, the firm should ________ to maximize profits.

If the individual labor supply curves for all workers in a given location slope up, the market supply curves in that location

Assuming that labor is the only variable input, if society values a good ________ it costs firms to hire the workers to produce that good, the good ________ be produced.

The marginal revenue product of labor curve will always shift to the left if

Assume that automobiles are a normal good. A decrease in income will

The law of diminishing marginal returns explains why a marginal revenue product schedule

A firm's ________ curve in a perfectly competitive product market is the same as its supply curve. Similarly, a firm's ________ curve in a perfectly competitive labor market is the same as its demand curve.

The demand for ________ in a competitive industry depends on its productivity and upon how its product is valued in the marketplace.

An deterioration in technology will cause a marginal revenue product of labor curve to

Where L represents labor and X represents output, MPL x PX is the value of labor's marginal product while the wage rate is the

In theory, if a profit-maximizing firm in a perfectly competitive labor market found it advantageous to hire one less worker, the firm should pay a

Suppose the supply of labor schedule decreases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

In , changes in technology affect the marginal revenue product of a unit of labor input. In , changes in technology affect the marginal cost of a unit of output.

Related to the Economics in Practice on page 211: According to the Economics in Practice, firms where managers had extensive training became productive than firms where managers had no training.

Assuming that labor is the only variable input, if society values a good it costs firms to hire the workers to produce that good, the good be produced.

A firm's curve in a perfectly competitive product market is the same as its supply curve. Similarly, a firm's curve in a perfectly competitive labor market is the same as its demand curve.

Where L represents labor and X represents output, MP_L x P_X is the value of labor's marginal product while the wage rate is the