Ch.18
Table 18-1
Number of Workers (L)
Output of
Firm A
Output of
Firm B
Output of
Firm C
Output of
Firm D
1
100
100
100
100
2
200
300
190
80
3
300
600
270
60
4
400
1,000
340
40
1.Refer to Table 18-1. Which firm’s production function exhibits diminishing marginal product?
a.
Firm A
b.
Firm B
c.
Firm C
d.
Firm D
ANS: C
2. Which of the following statements is correct?
a.
An increase in the supply of other factors, such as capital, will increase the demand for labor.
b.
Labor-saving technology will increase the demand for labor.
c.
Labor-augmenting technology will decrease the demand for labor.
d.
A decrease in the price of output will increase the demand for labor.
ANS: A
3. Suppose that a competitive firm hires labor up to the point…show more content…
b. A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage. c. By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost. d. All of the above are correct. ANS: D 13. 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 $20. 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? a. $10 b. $15 c. $20 d. $30 ANS: D Table 18-2 Quantity of Number of Baseballs Labor Per Day 0 0 1 100 2 240 3 360 4 440 5 500 14. Refer to Table 18-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. For which level of employment is the marginal product of labor greatest? a. 1 worker b. 2 workers c. 3 workers d. 4 workers ANS: B 15. Refer to Table 18-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $2.50 in a competitive market and the firm pays each unit of labor a wage equal to
b. A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage. c. By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost. d. All of the above are correct. ANS: D 13. 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 $20. 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? a. $10 b. $15 c. $20 d. $30 ANS: D Table 18-2 Quantity of Number of Baseballs Labor Per Day 0 0 1 100 2 240 3 360 4 440 5 500 14. Refer to Table 18-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. For which level of employment is the marginal product of labor greatest? a. 1 worker b. 2 workers c. 3 workers d. 4 workers ANS: B 15. Refer to Table 18-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $2.50 in a competitive market and the firm pays each unit of labor a wage equal to
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