Question 1

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $20 and W₂ = $18, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would

Accepted Answer

A shift of the labor supply curve from S1 to S2 indicates an increase in labor supply, which typically leads to a decrease in the equilibrium wage rate. Since the value of the marginal product of labor is equal to the wage rate in equilibrium, a decrease in the wage rate by $2 would decrease the value of the marginal product of labor by $2.

Question 2

Figure 18-7 -Refer to Figure 18-7. When the relevant labor supply curve is S₁, and the labor market is in equilibrium, the

Accepted Answer

At equilibrium, the wage rate is determined by the intersection of the labor demand curve and the labor supply curve, which in this case is at point E where the wage rate is W₁. This is the answer to option A. The opportunity cost of leisure is the wage rate that workers have to give up in order to work one more hour. In this case, the opportunity cost of leisure is also W₁ since that is the wage rate workers receive by working. This is the answer to option B. The value of the marginal product of labor to firms is the additional revenue earned by the firm from hiring one more unit of labor. At equilibrium, this value is equal to the wage rate. In this case, the value of the marginal product of labor is also W₁. This is the answer to option C. Therefore, all options (A), (B), and (C) are correct, making option (D) the best answer.

Question 3

Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada.
-Refer to Scenario 18-5. In the labor market in southern Canada, the equilibrium wage

Accepted Answer

When workers emigrate to southern Canada, the supply of labor increases, leading to a decrease in the equilibrium wage and an increase in the equilibrium quantity of labor.

Question 4

Scenario 18-4
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting.
-Refer to Scenario 18-4. The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania. This policy would contribute to

Accepted Answer

By returning refugees to Albania, the Italian government prevented an increase in the supply of labor in Italy, as the refugees were not allowed to stay and potentially join the workforce.

Question 5

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

The Black Death led to a severe shortage of labor in Europe, causing wages to increase and the marginal product of labor to rise. With fewer workers available, those who survived were able to demand higher wages and negotiate for better working conditions. This allowed for greater efficiency and productivity, ultimately leading to a higher marginal product of labor.

Question 6

In a representative labor market,

Accepted Answer

In a representative labor market, both the wage adjusting to balance supply and demand for labor (option A) and the wage equaling the value of the marginal product of labor (option B) are correct. Therefore, the correct answer is D, both A and B are correct. Option C, stating that an increase in the supply of labor increases the equilibrium wage, is incorrect as an increase in supply actually lowers the equilibrium wage.

Question 7

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

The Black Death led to a labor shortage, increasing the bargaining power and wages of surviving workers, while landowners faced economic hardship due to reduced labor availability and productivity.

Question 8

A change in the supply of one factor of production

Accepted Answer

A change in the supply of one factor of production can indeed alter the earnings of all other factors. This is because the factors of production are often interrelated; a change in the supply of one can affect the demand and productivity of others, thereby influencing their earnings.

Question 9

Figure 18-7 -Refer to Figure 18-7. Which of the following would shift the labor supply curve from S₁ to S₂?

Accepted Answer

A change in workers' attitudes toward the work-leisure tradeoff can affect the labor supply, shifting the curve from S1 to S2.

Question 10

Which of the following is not correct?

Accepted Answer

A profit-maximizing firm hires workers until the wage rate equals the value of the marginal product of labor, not when the wage rate exceeds it.

Question 11

Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage

Accepted Answer

An increase in immigration increases the supply of labor. According to basic economic principles, an increase in supply, with demand remaining constant, leads to a decrease in price (wage, in this case) and an increase in the quantity consumed (quantity of labor employed, in this case).

Question 12

Figure 18-7 -Refer to Figure 18-7. Which of the following would shift the labor supply curve from S₁ to S₂?

Accepted Answer

All of the options listed can cause the labor supply curve to shift from S1 to S2. A change in attitudes can affect the willingness to work, decreases in wages in other markets can make this market more attractive, and immigration increases the number of available workers.

Question 13

Which of the following is correct?

Accepted Answer

The value of the marginal product of labor is determined by the supply and demand for labor. Any event that changes these factors will affect the value of the marginal product.

Question 14

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $15 and W₂ = $12, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would

Accepted Answer

A shift of the labor supply curve from S₁ to S₂ would increase the quantity of labor supplied and decrease the wage rate. As a result, the value of the marginal product of labor would decrease by $3, since the additional units of labor would be less productive than the previous ones, and the equilibrium wage rate and quantity of labor would adjust accordingly. Thus, the correct answer is B.

Question 15

Scenario 18-4
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting.
-Refer to Scenario 18-4. The Albanian civil war probably affected Italian labor markets by causing

Accepted Answer

The influx of refugees likely increased the labor supply in Italy, which could lead to a decrease in the marginal product of labor as more workers are available for the same amount of capital and resources.

Question 16

The effect of the Black Death in 14th-century Europe was to

Accepted Answer

The Black Death led to a labor shortage, which increased wages and improved the bargaining power of peasants, reducing income inequality between peasants and the landed classes.

Question 17

Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada.
-Refer to Scenario 18-5. In the labor market in the northern United States, the equilibrium wage

Accepted Answer

The answer of Scenario 18-5
Suppose that workers from northern Minnesota,...

Question 18

The Black Death in fourteenth-century Europe resulted in

Accepted Answer

The answer of The Black Death in fourteenth-century Europe resulted...

Question 19

Figure 18-7 -Refer to Figure 18-7. If the relevant labor supply curve is S₂ and the current wage is W₁,

Accepted Answer

According to the labor supply curve S₂ and the current wage W₁, there is a surplus of labor because the quantity of labor supplied exceeds the quantity of labor demanded. Therefore, firms do not need to raise the wage, and an increase in the minimum wage may not be effective in restoring equilibrium in the market.

Question 20

Suppose that a large lake in the middle of Minnesota evaporates, leaving more fertile farm land for growing corn available. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and rents earned by landowners?

Accepted Answer

When a large lake in the middle of Minnesota evaporates, leaving more fertile farmland for growing corn, the supply of land increases. This leads to a decrease in the price of land, which in turn decreases rents earned by landowners. As land and labor are complements in a farming production function, the increase in the supply of land increases the demand for labor, and hence wages earned by workers would increase. Therefore, wages would increase, and rents would decrease.

Quiz 18: The Markets for the Factors of Production

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Figure 18-7 -Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

Scenario 18-5 Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada. -Refer to Scenario 18-5. In the labor market in southern Canada, the equilibrium wage

The Black Death in fourteenth-century Europe resulted in

In a representative labor market,

The Black Death in fourteenth-century Europe resulted in

A change in the supply of one factor of production

Figure 18-7 -Refer to Figure 18-7. Which of the following would shift the labor supply curve from S1 to S2?

Which of the following is not correct?

Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage

Figure 18-7 -Refer to Figure 18-7. Which of the following would shift the labor supply curve from S1 to S2?

Which of the following is correct?

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $15 and W2 = $12, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Scenario 18-4 In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting. -Refer to Scenario 18-4. The Albanian civil war probably affected Italian labor markets by causing

The effect of the Black Death in 14th-century Europe was to

Scenario 18-5 Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to southern Canada. -Refer to Scenario 18-5. In the labor market in the northern United States, the equilibrium wage

The Black Death in fourteenth-century Europe resulted in

Figure 18-7 -Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1,

Suppose that a large lake in the middle of Minnesota evaporates, leaving more fertile farm land for growing corn available. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and rents earned by landowners?

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $20 and W₂ = $18, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would

Figure 18-7 -Refer to Figure 18-7. When the relevant labor supply curve is S₁, and the labor market is in equilibrium, the

Figure 18-7 -Refer to Figure 18-7. Which of the following would shift the labor supply curve from S₁ to S₂?

Figure 18-7 -Refer to Figure 18-7. Which of the following would shift the labor supply curve from S₁ to S₂?

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $15 and W₂ = $12, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would

Figure 18-7 -Refer to Figure 18-7. If the relevant labor supply curve is S₂ and the current wage is W₁,