Question 1

(Table: Sunshine Flower Vase Co.) Refer to the table. If themarket wage for each worker rose from $100 to $125 per day,how many workers would the firm hire?

Accepted Answer

The firm will hire workers until the marginal product of labor equals the wage rate. At a wage rate of $100, the marginal product of the 4th worker is 15, the marginal product of the 5th worker is 13, and the marginal product of the 6th worker is 11. At a wage rate of $125, the marginal product of the 4th worker would still be 15, the marginal product of the 5th worker would be 12.5, and the marginal product of the 6th worker would be 10. So, the firm would hire 6 workers at the higher wage rate.

Question 2

When wages decrease, firms will hire more workers who willbe:

Accepted Answer

When wages decrease, firms may try to cut costs by hiring more workers who can be paid lower wages. However, these firms are unlikely to hire more workers for important tasks because those tasks usually require a certain level of skill and experience that cannot be compromised. Instead, firms are likely to assign new hires to the least important tasks, such as menial or repetitive tasks, in order to minimize the risk of disruption to their operations. In this way, firms can maintain productivity and profitability while still reducing their labor costs.

Question 3

(Table: Excellence Publishing) Refer to the table. Each edited booksells for $50. How many people will the company hire per year asediting staff if the annual salary is $47,000 per staff member?

Accepted Answer

C

Question 4

The market wage for workers is:
I. equal to the marginal product of labor
II.determined by the intersection of the firm's demand curvefor labor and the individual's supply curve for labor
III. always greater than the minimum wage.

Accepted Answer

The answer of The market wage for workers is:
I. equal...

Question 5

(Table: Excellence Publishing) Refer to the table. Initially each editedbook sells for $50. Suppose that there is an increase in the demand foredited books, such that each edited book now sells for $70. How manypeople will the company hire per year as editing staff if the salary is$47,000 per staff member?

Accepted Answer

The answer of  (Table: Excellence Publishing) Refer to the...

Question 6

The marginal product of labor is:

Accepted Answer

The answer of The marginal product of labor is:
...

Question 7

(Figure: Cleaners' Wages) Refer to the figure. How manyworkers will this firm hire at a wage of $29?
Figure: Cleaners' Wages

Accepted Answer

The answer of (Figure: Cleaners' Wages) Refer to the figure....

Question 8

A firm will hire a worker as long as:

Accepted Answer

A firm will hire a worker as long as the marginal product of labor is greater than or equal to the wage earned by the worker, as this ensures that the firm will earn a profit from the worker's productivity. B, C, and D are incorrect as they do not accurately reflect the conditions under which a firm would hire a worker.

Question 9

(Table: Sunshine Flower Vase Co.) Refer to the table. If thereis competition from new immigrants that lowers the marketwage for each worker from $100 to $70 per day, how manyworkers would the firm hire?

Accepted Answer

The firm will hire workers up to the point where their marginal revenue product is equal to their wage rate. At a market wage of $70, the marginal revenue product of the fifth worker is still greater than the wage, so the firm would hire five workers. However, at six workers, the marginal revenue product is only $60, which is less than the wage, so the firm would not hire a sixth worker. Therefore, the answer is C.

Question 10

(Table: Sunshine Flower Vase Co.) Refer to the table. What isthe marginal product of labor for the fifth worker?

Accepted Answer

The marginal product of labor for the fifth worker can be calculated by finding the difference in total output between employing four workers and employing five workers. From the table, we see that the total output with four workers is 8,800 and the total output with five workers is 9,980. Therefore, the marginal product of labor for the fifth worker is 9,980 - 8,800 = $180. This is the additional amount of output produced by hiring the fifth worker. Option C is the correct answer. None of the other choices are correct based on the information given in the table.

Question 11

To maximize profit, a firm will hire workers when the________ in revenue from hiring an additional worker________ the worker's wage.

Accepted Answer

To maximize profit, a firm will hire workers when the increase in revenue from hiring an additional worker (marginal revenue product) is greater than the worker's wage. This ensures that each additional worker adds more to revenue than they cost, thereby increasing profit.

Question 12

The increase in a firm's revenues created by hiring anadditional worker is called:

Accepted Answer

The increase in a firm's revenue created by hiring an additional worker is referred to as marginal product of labor. Marginal revenue refers to the change in total revenue resulting from a one-unit change in output, while marginal revenue of labor is not a commonly used term in economics.

Question 13

(Table: Sunshine Flower Vase Co.) Refer to the table. If themarket wage for each worker is $100 per day, how manyworkers will the company hire?

Accepted Answer

The answer of  (Table: Sunshine Flower Vase Co.) Refer...

Question 14

Which of the following statements is TRUE?

Accepted Answer

The market supply of labor is generally upward sloping because as wages increase, more people are willing to work or existing workers are willing to work more hours. However, an individual's labor supply curve may not always be upward sloping due to the income and substitution effects. At higher wages, an individual might choose to work less, valuing leisure more, which can lead to a backward-bending supply curve of labor.

Question 15

(Table: All-Stars) Refer to the table. A Major League Baseballteam is trying to increase the quality of its pitching staff byhiring all-star quality pitchers. If the team hires three all-starpitchers, what is the going salary for an all-star pitcher?

Accepted Answer

According to the table, the salaries for all-star pitchers range from $3 million to $7 million per season. Therefore, the best choice is B, as it correctly states that the going salary for an all-star pitcher is between $3 million and $7 million per season.

Question 16

The market demand curve for labor is based on the:

Accepted Answer

The market demand curve for labor is based on the marginal product of labor, which is the additional output produced by one additional unit of labor. Firms will demand more labor as long as the marginal product of labor is greater than the wage rate. Therefore, the market demand for labor is based on the marginal product of labor.

Question 17

A firm is willing to hire a worker when the marginal productof labor is:

Accepted Answer

A firm is willing to hire a worker when the marginal product of labor is greater than the wage because then the revenue generated by the worker exceeds the cost of hiring them.

Question 18

A firm will continue to hire workers as long as:

Accepted Answer

The marginal product of labor is the additional output produced when one additional unit of labor is added. As long as the marginal product of labor is greater than the wage, it means that the additional output produced by hiring one more worker is greater than the additional cost of paying that worker, making it profitable for the firm to continue hiring more workers.

Question 19

Marián Hossa was paid $7.4 million by the Detroit Red Wingsfor the 2008-2009 season. We can conclude that:

Accepted Answer

The fact that Detroit Red Wings paid Marián Hossa $7.4 million for the 2008-2009 season suggests that they expected him to increase the team's revenue by at least that amount. This means that they believed the investment in Hossa's labor would lead to an increase in the team's revenue, making this choice the best option. The other options are not necessarily true and cannot be concluded based on the given information.

Question 20

Which of the following statements is TRUE?
I. The demand for labor is downward sloping
II.The marginal product of labor declines as a firm hiresmore labor
III. The marginal product of labor is the demand curve forlabor.

Accepted Answer

The answer of Which of the following statements is TRUE?
I....

Quiz 17: Financial Markets