Question 1

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good.

Accepted Answer

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal revenue product of labor, not the price of the final good. The marginal revenue product of labor is the additional revenue the firm earns from hiring one more worker.

Question 2

The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Accepted Answer

The value of the marginal product of capital is calculated as the marginal product of capital multiplied by the market price of the good.

Question 3

Labor-augmenting technological advances decrease the marginal productivity of labor.

Accepted Answer

Labor-augmenting technological advances increase the marginal productivity of labor.

Question 4

Technological advances can cause the labor demand curve to shift.

Accepted Answer

Technological advances often increase productivity and efficiency, leading businesses to demand less labor or a different type of labor. This can shift the labor demand curve to the left, reducing the quantity of labor demanded at a given wage level.

Question 5

The demand for computer programmers is inseparably tied to the supply of computer software.

Accepted Answer

Computer programmers are needed to create, maintain and improve computer software. The demand for their skills and services depends on the production and usage of software applications. Therefore, the demand for programmers is closely linked to the supply of software.

Question 6

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

Accepted Answer

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal revenue product of labor, not just the marginal product of labor.

Question 7

In order to calculate the value of the marginal product of labor,a manager must know the marginal product of labor and the wage rate of the worker.

Accepted Answer

To calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the price of the output, not the wage rate of the worker.

Question 8

The term Luddite refers to "tekkies" or people who are the first to adopt new technological advances.

Accepted Answer

The term Luddite actually refers to people who are opposed to new technological advances, particularly those that might take away jobs or disrupt traditional ways of life.

Question 9

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 up to the point at which the price of output equals average variable cost.

Accepted Answer

When a competitive firm hires labor up to the point where the value of the marginal product of labor equals the wage, it is maximizing its profit from labor input. This condition does not directly relate to the firm producing up to the point where the price of output equals average variable cost. Instead, the firm produces up to the point where price equals marginal cost.

Question 10

If Firm X is a competitive firm in the market for labor,it has little influence over the wage it pays its employees.

Accepted Answer

Competitive firms in the labor market have no monopoly power and must offer wages that are in line with market rates. Therefore, they have little influence over the wage they pay their employees.

Question 11

Labor-saving technological advances increase the marginal productivity of labor.

Accepted Answer

The answer of Labor-saving technological advances increase the marginal productivity...

Question 12

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

Accepted Answer

Technological advances have led to efficiency gains and new job opportunities in industries such as information technology and healthcare, offsetting the impact of rising wages on employment.

Question 13

An increase in the output price will increase the firm's demand for labor,all else equal.

Accepted Answer

When the output price increases, the firm's revenue and profits also increase. This makes it more profitable for the firm to produce more output, which in turn requires more labor. Therefore, the firm's demand for labor increases as a result of an increase in output price, assuming all else remains constant.

Question 14

In a competitive market for labor,the equilibrium wage always equals the value of the marginal product.

Accepted Answer

In a competitive market for labor, the equilibrium wage is determined by the intersection of the demand and supply curves for labor. At this point, the wage rate is equal to the value of the marginal product (VMP) of labor. This is because employers will continue to hire workers as long as their VMP is greater than or equal to the wage rate, and workers will continue to supply their labor as long as the wage rate is greater than or equal to their reservation wage (the lowest wage they are willing to accept). Therefore, in equilibrium, the wage rate will equal the VMP of labor.

Question 15

The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor.

Accepted Answer

The value of the marginal product of labor can be calculated as the marginal product of labor multiplied by the price of the final good.

Question 16

The idea that rational employers think at the margin is central to understanding how many units of labor they choose to employ.

Accepted Answer

Rational employers consider the extra benefit and cost of hiring each additional unit of labor and weigh it against the marginal revenue product of labor to determine their optimal number of employees.

Question 17

Daryn is raking leaves to earn money for his university's economics club.In the first hour,he rakes 8 bags of leaves.In the second hour,he rakes 6 bags of leaves.If he earns $8 per hour,the value of the marginal product of the second hour of labor is $16.

Accepted Answer

The value of the marginal product (VMP) is calculated by dividing the change in total output by the change in labor input. In this case, the change in labor input is 1 hour, and the change in total output is 6 bags of leaves (since Daryn raked 8 bags in the first hour and 14 bags in total). Therefore, the VMP of the second hour is 6/1 = 6. Since Daryn earns $8 per hour, the value of the marginal product of the second hour of labor is $48, not $16.

Question 18

For competitive firms,the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Accepted Answer

In a competitive labor market, firms are price-takers and the value of marginal product of labor (VMPL) is equal to the wage rate. The demand for labor curve in this case is the VMPL curve, because firms will hire workers up to the point where their VMPL equals the wage rate. Therefore, the curve representing the VMPL is the same as the demand for labor curve for competitive firms.

Question 19

Labor-augmenting technological advances increase the marginal productivity of labor.

Accepted Answer

Labor-augmenting technological advances are designed to increase the efficiency and productivity of labor. As a result, workers using these advances are able to produce more output per unit of time, leading to an increase in the marginal productivity of labor.

Question 20

Labor-saving technological advances decrease the marginal productivity of labor.

Accepted Answer

Labor-saving technological advances are designed to reduce the amount of labor required to produce the same output. Therefore, the marginal productivity of labor decreases as the same amount of output can be produced with fewer workers, resulting in a decrease in the value of each additional unit of labor.

Quiz 18: The Market For the Factors of Production.

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the price of the final good.

The value of the marginal product of capital can be calculated as the market price of the good multiplied by the marginal product of capital.

Labor-augmenting technological advances decrease the marginal productivity of labor.

Technological advances can cause the labor demand curve to shift.

The demand for computer programmers is inseparably tied to the supply of computer software.

A profit-maximizing competitive firm will hire workers up to the point at which the wage equals the marginal product of labor.

In order to calculate the value of the marginal product of labor,a manager must know the marginal product of labor and the wage rate of the worker.

The term Luddite refers to "tekkies" or people who are the first to adopt new technological advances.

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 up to the point at which the price of output equals average variable cost.

If Firm X is a competitive firm in the market for labor,it has little influence over the wage it pays its employees.

Labor-saving technological advances increase the marginal productivity of labor.

In the United States,technological advances help explain persistently rising employment in the face of rising wages.

An increase in the output price will increase the firm's demand for labor,all else equal.

In a competitive market for labor,the equilibrium wage always equals the value of the marginal product.

The value of the marginal product of labor can be calculated as the price of the final good minus the marginal product of labor.

The idea that rational employers think at the margin is central to understanding how many units of labor they choose to employ.

Daryn is raking leaves to earn money for his university's economics club.In the first hour,he rakes 8 bags of leaves.In the second hour,he rakes 6 bags of leaves.If he earns $8 per hour,the value of the marginal product of the second hour of labor is $16.

For competitive firms,the curve that represents the value of marginal product of labor is the same as the demand for labor curve.

Labor-augmenting technological advances increase the marginal productivity of labor.

Labor-saving technological advances decrease the marginal productivity of labor.