Question 1

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Let Q represent the number of boxes of envelopes produced per week.Which of the following points is not a point on this firm's production function?

Accepted Answer

The answer of Table 18-1.The table displays data for a...

Question 2

Assume the market for handkerchiefs is competitive.A new invention leads to labor-augmenting technological progress in the production of handkerchiefs.This development

Accepted Answer

Labor-augmenting technological progress increases the productivity of workers in the production of handkerchiefs. This results in a decrease in the cost of production, which in turn leads to an increase in the demand for workers who make handkerchiefs. The increased demand for workers leads to an increase in their equilibrium wage.

Question 3

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $7.50.How many workers should the firm hire?

Accepted Answer

The firm should hire workers up to the point where the marginal revenue product (MRP) equals the wage rate. If the wage rate is not given, the firm should hire workers until the MRP of the last worker hired is greater than or equal to the cost of hiring that worker. Assuming the MRP is calculated by multiplying the marginal product of labor by the price per box ($7.50), the firm should hire 4 workers if the MRP of the 4th worker is still greater than or equal to the wage rate, and the MRP of the 5th worker is less than the wage rate.

Question 4

A competitive,profit-maximizing pays its workers a wage of $294 per day.The marginal product of the last worker is 35 units of output.What is the firm's marginal cost of producing its last unit of output?

Accepted Answer

The answer of A competitive,profit-maximizing pays its workers a wage...

Question 5

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the marginal profit of the fourth worker?

Accepted Answer

To calculate the marginal profit of the fourth worker, we need to find the difference in total profit between the output level of three workers and four workers. From the table, we can see that the total product of three workers is 5 boxes and the total product of four workers is 6 boxes. 
Therefore, the marginal product of the fourth worker is 1 box (6-5). 
The total cost of hiring four workers is $800, so the marginal cost of the fourth worker is $200 (800-600). 
The marginal profit is calculated as marginal revenue minus marginal cost. 
Since the firm sells each box for $6, the marginal revenue for the fourth worker is $6. 
Therefore, the marginal profit of the fourth worker is $-96 ($6 - $200). 
So, the best choice is B.

Question 6

A competitive,profit-maximizing firm hires labor up to the point at which the wage is equal to the __________.

Accepted Answer

The answer of A competitive,profit-maximizing firm hires labor up to...

Question 7

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.If the value of the marginal product of the first worker hired is $938,then how many workers does the firm employ?

Accepted Answer

The value of the marginal product (VMP) is the additional revenue that is generated by the additional worker. The firm chooses to hire employees up to the point where the VMP equals the wage rate. In this case, the wage rate is $700. Therefore, the firm will hire workers up to the point where VMP = $700.

At the point where the first worker is hired, the VMP is $938, which is greater than the wage rate. Therefore, the firm will hire at least one worker.

At the point where the second worker is hired, the VMP is $812, which is still greater than the wage rate. Therefore, the firm will hire at least two workers.

At the point where the third worker is hired, the VMP is $663, which is less than the wage rate. Therefore, the firm will not hire a third worker.

Therefore, the optimal number of workers for the firm to hire is 2. Answer choice B is correct.

Question 8

Restaurants' demand for cooks and waiters is inseparably linked to the supply of __________.

Accepted Answer

The answer of Restaurants' demand for cooks and waiters is...

Question 9

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Let Q represent the number of boxes of envelopes produced per week.One point on this firm's production function is

Accepted Answer

The answer of Table 18-1.The table displays data for a...

Question 10

Figure 18-1 
-Refer to Figure 18-1.Suppose the intersection of the supply and demand curves matches with a value of $200 on the vertical axis.Then

Accepted Answer

The intersection of the supply and demand curves indicates the equilibrium point in the market, where the quantity of capital supplied matches the quantity demanded. At this point, the value of the marginal product of capital is equal to the price of capital, which is $200 in this case. Therefore, choice B is correct. A is incorrect because the marginal product of capital is a measure of the additional output that can be produced by adding one unit of capital, and is not necessarily equal to the price of capital. C is incorrect because the price of capital is $200, but it does not indicate that a unit of capital can be purchased for that price. D is incorrect because the equilibrium price of capital in the capital goods market does not necessarily determine the wages of workers in that market.

Question 11

Figure 18-1 
-Refer to Figure 18-1.What is measured on the vertical axis of the graph?

Accepted Answer

The graph shows the relationship between the rental price of capital goods and the quantity of capital demanded. The vertical axis therefore measures the rental price of capital, which is the price firms pay to rent capital goods.

Question 12

The demand for rocket scientists is inseparably linked to the supply of __________.

Accepted Answer

The answer of The demand for rocket scientists is inseparably...

Question 13

Assume the market for handkerchiefs is competitive.A decrease in the market price of handkerchiefs

Accepted Answer

A decrease in the market price of handkerchiefs will lead to a decrease in the revenue of firms producing handkerchiefs. This will then lead to a decrease in demand for workers who make handkerchiefs, as firms will reduce their hiring to cut costs. As a result, the equilibrium wage for these workers will also decrease.

Question 14

What is the relationship between the marginal product of labor and the value of the marginal product of labor?

Accepted Answer

The answer of What is the relationship between the marginal...

Question 15

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the value of the marginal product of the second worker?

Accepted Answer

The value of the marginal product is calculated by multiplying the marginal product of labor by the price of the product. If the second worker's marginal product is 106 boxes, then 106 boxes * $6 = $636.

Question 16

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $7.Suppose also that the firm's fixed costs amount to $400.How many workers should the firm hire in order to maximize profit,and what is the maximum profit?

Accepted Answer

The answer of Table 18-1.The table displays data for a...

Question 17

Does history suggest that most technological progress is labor-saving or labor-augmenting?

Accepted Answer

The answer of Does history suggest that most technological progress...

Question 18

A competitive,profit-maximizing pays its workers a wage of $200 per day and it sells its output for $10 per unit.Determine the marginal product,on a daily basis,of the last worker hired.

Accepted Answer

The answer of A competitive,profit-maximizing pays its workers a wage...

Question 19

When a competitive firm hires labor up to the point at which the value of the marginal product of labor equals the wage,it also produces output up to the point at which marginal cost is equal to __________.

Accepted Answer

The answer of When a competitive firm hires labor up...

Question 20

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week.
 
-Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.The firm would not be interested in hiring a third worker unless the wage fell from its current level of $600 to what level?

Accepted Answer

To determine the marginal product of hiring a third worker, we need to calculate the additional output that the third worker would produce. The additional output of the third worker is 75-60=15 boxes. The additional cost of hiring the third worker would be $600, so the marginal cost of producing an additional box of envelopes is $40 ($600/15). If the firm sells each box for $6, then the marginal revenue of producing an additional box is $6. Therefore, the firm would only be interested in hiring a third worker if the marginal revenue of producing an additional box is greater than the marginal cost. 
6 > 40, so the firm would not hire a third worker at the current wage rate of $600.
If the wage rate fell to $551, then the total cost of hiring a third worker would be $1,651 ($600+$600+$451), and the marginal cost of producing an additional box would be $30.67 ($1,651/54). Under these conditions, the marginal revenue of producing an additional box would still be $6. Therefore, the firm would hire a third worker if the wage rate fell to $551.

Quiz 18: The Market for the Factors of Production

Assume the market for handkerchiefs is competitive.A new invention leads to labor-augmenting technological progress in the production of handkerchiefs.This development

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $7.50.How many workers should the firm hire?

A competitive,profit-maximizing pays its workers a wage of $294 per day.The marginal product of the last worker is 35 units of output.What is the firm's marginal cost of producing its last unit of output?

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the marginal profit of the fourth worker?

A competitive,profit-maximizing firm hires labor up to the point at which the wage is equal to the __________.

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.If the value of the marginal product of the first worker hired is $938,then how many workers does the firm employ?

Restaurants' demand for cooks and waiters is inseparably linked to the supply of __________.

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.Let Q represent the number of boxes of envelopes produced per week.One point on this firm's production function is

Figure 18-1 -Refer to Figure 18-1.Suppose the intersection of the supply and demand curves matches with a value of $200 on the vertical axis.Then

Figure 18-1 -Refer to Figure 18-1.What is measured on the vertical axis of the graph?

The demand for rocket scientists is inseparably linked to the supply of __________.

Assume the market for handkerchiefs is competitive.A decrease in the market price of handkerchiefs

What is the relationship between the marginal product of labor and the value of the marginal product of labor?

Table 18-1.The table displays data for a small,competitive,profit-maximizing firm that produces and sells envelopes.The time frame is one week. -Refer to Table 18-1.Suppose the firm sells each box of envelopes that it produces for $6.What is the value of the marginal product of the second worker?

Does history suggest that most technological progress is labor-saving or labor-augmenting?

A competitive,profit-maximizing pays its workers a wage of $200 per day and it sells its output for $10 per unit.Determine the marginal product,on a daily basis,of the last worker hired.

When a competitive firm hires labor up to the point at which the value of the marginal product of labor equals the wage,it also produces output up to the point at which marginal cost is equal to __________.