Question 1

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

Accepted Answer

If Juanita can help the store sell an additional three rings per day for a profit of $20 each, she would generate an additional profit of $60 per day for the store. Therefore, if the wage rate is less than $60 per day, it would be profitable for the owner to hire her. However, if the wage rate is more than $60 per day, the additional profit generated by Juanita would not be enough to cover her wage and hiring her would not be profitable for the owner. Therefore, the owner would not hire Juanita if the wage rate is more than $60 per day.

Question 2

If the value of the marginal product of labor exceeds the wage, then the firm could

Accepted Answer

If the value of the marginal product of labor exceeds the wage, it means that the additional revenue generated from hiring an additional worker is greater than the cost of paying that worker. Therefore, the firm can increase profit by hiring additional labor.

Question 3

The value of the marginal product of labor is equal to the change in

Accepted Answer

The answer of The value of the marginal product of...

Question 4

A profit-maximizing, competitive firm for which the marginal product of labor is diminishing also experiences

Accepted Answer

As the firm hires more labor, the marginal product of labor diminishes, meaning that each additional worker adds less output than the previous one. Therefore, the firm will only continue to hire workers up to the point where the marginal cost of labor equals the marginal revenue produced by that additional worker. This results in a downward-sloping demand for labor.

Question 5

The negative slope of the value of marginal product curve is most easily explained by

Accepted Answer

The negative slope of the value of marginal product curve is due to diminishing marginal product, which occurs as additional units of a variable input (such as labor) are added to a fixed input (such as capital). As more and more units of the variable input are added, each additional unit generates less and less output.

Question 6

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Accepted Answer

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the market price of the output. This is because the value of the output produced by an additional unit of input is equal to the market price of that output multiplied by the marginal product of the input used to produce it. Therefore, the answer is D, the market price of the output.

Question 7

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $20 each, the value of marginal product of the ninth worker is

Accepted Answer

The answer of Suppose that eight workers can manufacture 70...

Question 8

Linda's Autoplex performs oil changes on automobiles, light trucks, and sport utility vehicles. She is a profit­ maximizing business owner whose firm operates in a competitive market. The marginal cost of an oil change is $10. The marginal productivity of the last worker that Linda hired was 1.5 oil changes per hour. What is the maximum hourly wage that Linda was willing to pay the last worker hired?

Accepted Answer

To maximize profits, Linda should hire workers up to the point where the marginal revenue product (MRP) equals the wage rate. In this case, since the marginal productivity of the last worker hired was 1.5 oil changes per hour and the marginal cost of an oil change is $10, the MRP is $15 (1.5 x $10). Therefore, the maximum hourly wage that Linda should pay the last worker hired is $15.

Question 9

Which of the following statements is correct?

Accepted Answer

A) The value of the marginal product curve shows the additional output that an additional unit of labor would produce. For competitive, profit-maximizing firms, the labor demand curve is derived from the value of the marginal product curve. Therefore, statement A is correct.
B) A competitive, profit-maximizing firm will hire workers up to the point where the value of the marginal product of labor equals the wage because at that point, the cost of hiring an additional worker (the wage) equals the benefit (the additional output produced). This is the point where the firm maximizes its profits. Therefore, statement B is correct.
C) When the firm hires labor up to the point where the value of the marginal product of labor equals the wage, it is producing where the marginal cost of producing an additional unit of output equals the price it receives for that unit of output. This is because the marginal cost of producing an additional unit of output is the wage, which is equal to the value of the marginal product of labor. Therefore, statement C is also correct.
D) Since all of the statements are correct, the answer is D.

Question 10

Typically, as a firm hires additional workers, the marginal product of labor

Accepted Answer

The law of diminishing marginal returns states that as more of a variable input (such as labor) is added to a fixed input (such as capital), the marginal product of that variable input will eventually decrease. This means that as a firm hires more workers, the marginal product of each additional worker will decrease. As a result, the value of the marginal product of labor (which is equal to the marginal product multiplied by the price of the output) will also decrease. Therefore, choice A is the best answer.

Question 11

When a firm experiences diminishing marginal product, what is the shape of the curve that represents the value of the marginal product of labor?

Accepted Answer

When a firm experiences diminishing marginal product, the value of the marginal product of labor decreases as more units of labor are hired, resulting in a downward sloping curve.

Question 12

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

Accepted Answer

The answer of If the value of the marginal product...

Question 13

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

Accepted Answer

When considering whether to hire another worker, firms should ultimately be concerned with the impact on profit. While adding a worker would impact costs and output, the ultimate goal is to increase profit. Therefore, the correct answer is D.

Question 14

If a firm experiences diminishing marginal productivity of labor, the marginal product

Accepted Answer

Diminishing marginal productivity of labor means that as more units of labor are added, the additional output (marginal product) will eventually decrease. Therefore, the marginal product will decrease as total product increases.

Question 15

Value of marginal product is defined as the additional

Accepted Answer

The answer of Value of marginal product is defined as...

Question 16

Tony is the owner of Tony's Taqueria. Tony is a profit­maximizing owner whose firm operates in a competitive market. An additional worker costs Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco?

Accepted Answer

The answer of Tony is the owner of Tony's Taqueria....

Question 17

For a profit-maximizing, competitive firm, the value of the marginal product of labor

Accepted Answer

The answer of For a profit-maximizing, competitive firm, the value...

Question 18

To maximize profit, a competitive firm hires workers up to the point of intersection of the

Accepted Answer

In order to maximize profit, a competitive firm should hire workers up to the point where the value of marginal product (VMP) equals the wage rate. This is because at this point, the additional revenue generated by hiring an additional worker (VMP) is equal to the additional cost incurred (wage rate). Therefore, any further increase in labor input would result in a reduction in profit as the cost of hiring an additional worker exceeds the revenue generated. Hence, the firm should hire workers up to the point of intersection of the VMP curve and the wage line.

Question 19

Sally runs a hair styling salon. Sally is a profit-maximizing owner whose firm operates in a competitive market. The marginal cost of a haircut is $15. What is the maximum wage that Sally will pay her stylists?

Accepted Answer

The answer of Sally runs a hair styling salon. Sally...

Question 20

Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $20. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired?

Accepted Answer

The answer of Diane's Auto World installs tires on automobiles,...

Quiz 18: The Markets for the Factors of Production

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

If the value of the marginal product of labor exceeds the wage, then the firm could

The value of the marginal product of labor is equal to the change in

A profit-maximizing, competitive firm for which the marginal product of labor is diminishing also experiences

The negative slope of the value of marginal product curve is most easily explained by

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $20 each, the value of marginal product of the ninth worker is

Which of the following statements is correct?

Typically, as a firm hires additional workers, the marginal product of labor

When a firm experiences diminishing marginal product, what is the shape of the curve that represents the value of the marginal product of labor?

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

If a firm experiences diminishing marginal productivity of labor, the marginal product

Value of marginal product is defined as the additional

Tony is the owner of Tony's Taqueria. Tony is a profitmaximizing owner whose firm operates in a competitive market. An additional worker costs Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco?

For a profit-maximizing, competitive firm, the value of the marginal product of labor

To maximize profit, a competitive firm hires workers up to the point of intersection of the

Sally runs a hair styling salon. Sally is a profit-maximizing owner whose firm operates in a competitive market. The marginal cost of a haircut is $15. What is the maximum wage that Sally will pay her stylists?

Quiz 18: The Markets for the Factors of Production

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then

If the value of the marginal product of labor exceeds the wage, then the firm could

The value of the marginal product of labor is equal to the change in

A profit-maximizing, competitive firm for which the marginal product of labor is diminishing also experiences

The negative slope of the value of marginal product curve is most easily explained by

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $20 each, the value of marginal product of the ninth worker is

Which of the following statements is correct?

Typically, as a firm hires additional workers, the marginal product of labor

When a firm experiences diminishing marginal product, what is the shape of the curve that represents the value of the marginal product of labor?

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

If a firm experiences diminishing marginal productivity of labor, the marginal product

Value of marginal product is defined as the additional

Tony is the owner of Tony's Taqueria. Tony is a profit­maximizing owner whose firm operates in a competitive market. An additional worker costs Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco?

For a profit-maximizing, competitive firm, the value of the marginal product of labor

To maximize profit, a competitive firm hires workers up to the point of intersection of the

Sally runs a hair styling salon. Sally is a profit-maximizing owner whose firm operates in a competitive market. The marginal cost of a haircut is $15. What is the maximum wage that Sally will pay her stylists?

Tony is the owner of Tony's Taqueria. Tony is a profitmaximizing owner whose firm operates in a competitive market. An additional worker costs Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco?