Question 1

Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, in the labor market for health care employees the equilibrium wage

Accepted Answer

The increase in the output price for health care services is likely to increase the demand for health care workers. Thus, the equilibrium wage in the labor market for health care employees is likely to increase. At the elevated wage rate, more people are willing to become health care workers, so the equilibrium quantity of labor in the market would also increase.

Question 2

Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated, the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal, what effect did these two circumstances have on the equilibrium wage in the labor market for computer programmers?

Accepted Answer

The increase in the supply of computer programming graduates and the decrease in the value of the marginal product of computer programmers due to the dot.com bust both lead to a decrease in the equilibrium wage in the labor market for computer programmers.

Question 3

Suppose that the market for labor is initially in equilibrium. A decrease in the price of output will cause the equilibrium wage

Accepted Answer

A decrease in the price of output indicates a decrease in demand for the goods and services produced. This will lead firms to reduce their output and demand for labor, resulting in a decrease in the equilibrium wage and quantity of labor in the market.

Question 4

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

Accepted Answer

An increase in the price of output will increase the profit that firms earn from producing goods and services, so they will demand more labor to increase production. As a result, the demand curve for labor will shift to the right, causing an increase in both the equilibrium wage rate and the equilibrium quantity of labor hired.

Question 5

Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, the equilibrium quantity of health care employees would

Accepted Answer

With an increased output price for health care services, the demand for health care workers increases. This would create a shortage of health care workers which would cause the equilibrium quantity of health care employees to increase, as employers would have to increase the number of workers to meet the demand for services.

Question 6

Suppose that technological progress increases the productivity of teachers. Which of the following accurately describes the labor market for teachers after the technological change? Equilibrium wages will

Accepted Answer

Technological progress that increases the productivity of teachers will lead to an increase in demand for their services. As a result, the equilibrium wage rate will increase as employers compete to hire the best teachers. The increase in wages will encourage more people to become teachers and existing teachers to work more hours. Therefore, the equilibrium quantity of teachers employed will also rise.

Question 7

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium wage in the labor market for computer programmers

Accepted Answer

When the value of the marginal product of a worker increases, holding all else equal, their equilibrium wage will increase as well. Therefore, the equilibrium wage in the labor market for computer programmers would have increased dramatically during the late 1990s.

Question 8

Suppose that the market for labor is initially in equilibrium. If the firm employs labor-saving technology, the equilibrium wage

Accepted Answer

The answer of Suppose that the market for labor is...

Question 9

When firms are able to increase the amount of physical capital available to workers, the

Accepted Answer

Increasing the amount of physical capital available to workers can lead to an increase in the value of the marginal product of labor because workers are now able to produce more output with the additional capital. This can lead to higher productivity and potentially higher wages for workers, as firms will be willing to pay more to utilize their increased production capabilities. Additionally, the final product price may not necessarily increase as a result, as the increased productivity may offset any additional costs associated with the purchase and maintenance of the new physical capital.

Question 10

Scenario 18-7
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: An increasing number of students in U.S. primary and secondary schools increases the number of students entering college, increasing the output price of university economics professors' services.
-Refer to Scenario 18-7. As a result of these two events, holding all else constant, the equilibrium wages of university economics professors will

Accepted Answer

The answer of Scenario 18-7
Suppose the following events occur in...

Question 11

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, what effect did this process have on the labor market for computer programmers? The equilibrium wage

Accepted Answer

An increase in the value of the marginal product of computer programmers means they have become more productive and, therefore, more valuable to employers. This will lead to a shift in the demand curve for computer programmers, causing an increase in equilibrium wage and quantity of labor.

Question 12

An increase in the value of the marginal product of labor has the effect of increasing the

Accepted Answer

An increase in the value of the marginal product of labor means that each additional unit of labor is producing more output, which makes labor more valuable to the firm. As a result, the firm will want to hire more workers (increasing the demand for labor) and will be willing to pay a higher wage to attract them. This, in turn, will lead to an increase in the quantity of labor employed. Therefore, all of the above choices are correct.

Question 13

Scenario 18-7
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: An increasing number of students in U.S. primary and secondary schools increases the number of students entering college, increasing the output price of university economics professors' services.
-Refer to Scenario 18-7. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will

Accepted Answer

The recession lowers the opportunity cost of going to graduate school for economics, and thus more people may choose to become university economics professors. Additionally, the increasing number of students entering college increases the demand for university economics professors' services. As a result, both events increase the quantity supplied and the quantity demanded of university economics professors, leading to an increase in the equilibrium quantity.

Question 14

Suppose medical research provides evidence that eating bananas provides far greater health benefits than was previously thought. The resulting increase in the demand for bananas

Accepted Answer

An increase in the demand for bananas will increase the market price of bananas, which in turn will increase the value of the marginal product of banana pickers. The marginal product of banana pickers may or may not increase depending on the available technology and resources for banana picking, but the value of their marginal product will definitely increase. The supply of banana pickers is not necessarily affected by the increase in demand for bananas.

Question 15

Scenario 18-8
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: A decreasing number of students in U.S. primary and secondary schools decreases the number of students entering college, decreasing the output price of university economics professors' services.
-Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will

Accepted Answer

The answer of Scenario 18-8
Suppose the following events occur in...

Question 16

Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, the equilibrium quantity in the labor market for computer programmers

Accepted Answer

An increase in the value of the marginal product of all computer programmers indicates an increase in the demand for computer programmers. This would lead to an increase in the equilibrium quantity of computer programmers in the labor market.

Question 17

Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, the equilibrium wage of health care employees would

Accepted Answer

The increase in the output price for health care services will lead to an increase in demand for health care workers, given that they have become relatively more valuable to the market. This increase in demand will put upward pressure on wages, resulting in an increase in the equilibrium wage.

Question 18

Suppose that the market for labor is initially in equilibrium. If the firm employs labor-augmenting technology, the equilibrium wage

Accepted Answer

When a firm employs labor-augmenting technology, it increases the productivity of labor, which shifts the demand curve for labor to the right. This results in a higher equilibrium wage and quantity of labor.

Question 19

Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal what effect did these two circumstances have on the equilibrium quantity in the labor market for computer programmers?

Accepted Answer

The answer of Consider the labor market for computer programmers....

Question 20

Scenario 18-8
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: A decreasing number of students in U.S. primary and secondary schools decreases the number of students entering college, decreasing the output price of university economics professors' services.
-Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium wages of university economics professors will

Accepted Answer

Event 1 will increase the supply of individuals seeking to become university economics professors, as the opportunity cost of their time has decreased. This would normally lead to a decrease in equilibrium wages. Event 2 reduces demand for university economics professors, which also leads to a decrease in equilibrium wages. Therefore, both events work together to decrease the equilibrium wages of university economics professors.

Quiz 18: The Markets for the Factors of Production