Question 1

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

Accepted Answer

Diminishing marginal productivity of labor means that the additional output produced by each additional unit of labor decreases as more labor is added. As total product increases, the increase in output (marginal product) from each additional unit of labor decreases, resulting in a decrease in marginal product. Therefore, the answer is B, decreases as total product increases.

Question 2

Value of marginal product is defined as the additional

Accepted Answer

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

Question 3

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

Accepted Answer

If the marginal product of labor is diminishing, it means that each additional unit of labor adds less and less to the firm's output. This implies that the firm's marginal revenue product of labor (which is equal to the marginal product of labor multiplied by the price of the firm's output) is also diminishing. Since a profit-maximizing, competitive firm hires labor up to the point where the marginal revenue product of labor equals the wage, diminishing marginal revenue product of labor implies a downward-sloping demand for labor. Therefore, the correct answer is (C) a downward-sloping demand for labor. Choices (A) and (B) are incorrect because the elasticity of labor supply does not depend on whether the marginal product of labor is diminishing or not. Choice (D) is incorrect because the demand for labor is downward-sloping when the marginal revenue product of labor is diminishing.

Question 4

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 is the additional output produced when one additional unit of input is added. To determine the value of this additional output, it is necessary to know the market price of the output. Therefore, the correct choice is D) market price of the output.

Question 5

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

Accepted Answer

When deciding whether to hire an additional worker, firms ultimately aim to maximize profit. Therefore, they need to consider how the additional worker will affect the company's overall profitability. While considering costs, revenues, and output are all important factors, the ultimate goal is to maximize profit.

Question 6

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 output generated by hiring one more worker is worth more than the cost of that worker's wage. This means that hiring additional labor will increase profit, as the firm will be getting more value from the workers than it is paying them.

Question 7

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 8

Which of the following statements is correct?

Accepted Answer

A) The value of the marginal product curve represents the additional output produced by adding one unit of labor. For competitive, profit-maximizing firms, the point where the value of the marginal product of labor equals the wage is the optimal point to hire labor. Therefore, the value of the marginal product curve serves as labor demand curve.
B) This statement is a classic rule for a profit-maximizing firm in a competitive market. At the point where the value of the marginal product of labor equals the wage, the firm is indifferent between hiring an additional unit of labor or not.
C) In a perfectly competitive market, where the firm is a price taker, the marginal cost curve is equal to the wage rate. Thus, 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 price (marginal revenue in this case) equals marginal cost.

Question 9

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 curve that represents the value of the marginal product of labor becomes downward sloping. This means that the additional output produced by each additional unit of labor decreases, resulting in a decrease in the value of the marginal product of labor.

Question 10

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

Linda's profit-maximizing strategy requires her to hire workers up to the point where their marginal productivity equals their hourly wage. Since the marginal cost of each oil change is $10 and the last worker hired has a marginal productivity of 1.5 oil changes per hour, Linda would be willing to pay the worker up to $15 per hour (1.5 x $10 = $15). Therefore, the maximum hourly wage that Linda was willing to pay the last worker hired is $15, which corresponds to choice B.

Question 11

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 12

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

Accepted Answer

As more workers are hired, the amount of output each additional worker contributes to the production process, or the marginal product of labor, tends to decrease due to diminishing marginal returns. This means that each additional worker may be less productive than the one before, leading to a decrease in the overall output of the firm. As a result, the value of the marginal product of labor, which is the additional revenue generated by each additional unit of labor, also tends to decrease.

Question 13

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 14

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 15

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, meaning each additional worker adds less and less output to the production process. As more workers are added, the productivity of each additional worker decreases, resulting in a negative slope for the value of marginal product.

Question 16

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 17

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 marginal cost of a taco is the additional cost to produce one more taco. Since the marginal productivity of an additional worker is 40 tacos and the cost of hiring the worker is $200, the marginal cost of a taco is 200/40 = $5. Therefore, choice C is the correct answer.

Question 18

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,...

Question 19

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

The additional three rings per day for a profit of $20 each would result in an extra profit of $60 per day. Therefore, if the wage rate is more than $60 per day, it would be profitable to hire Juanita. If the wage rate is less than $60 per day, it would not be worth it to hire her as the extra profit would not cover her wage. Therefore, the correct choice is C.

Question 20

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

Accepted Answer

Hiring workers up to the point where the value of the marginal product is equal to the wage is the profit-maximizing point for a competitive firm. At this point, the firm is paying exactly what the worker is worth in terms of their marginal contribution to output. Hiring more workers beyond this point would decrease the firm's profit.

Quiz 18: The Markets for the Factors of Production

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

Value of marginal product is defined as the additional

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

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

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

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

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?

Which of the following statements is correct?

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

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

Typically, as a firm hires additional workers, 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

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

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

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

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?

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

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

Quiz 18: The Markets for the Factors of Production

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

Value of marginal product is defined as the additional

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

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

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

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

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?

Which of the following statements is correct?

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

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

Typically, as a firm hires additional workers, 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

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

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

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

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?

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

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

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?