Winston-Salem/Forsyth County Schools / Front Page



Section 13 Practice Test

|Number |Output |

|of Workers |of Corn |

| |(units of corn) |

|0 |0 |

|1 |30 |

|2 |58 |

|3 |79 |

|4 |94 |

|5 |104 |

|6 |108 |

|7 |110 |

|Table 69-2: Workers and Corn Output |

1. (Table 69-2: Workers and Corn Output) Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is $125 and the price per unit of corn is $10. The table shows Laura's production function. To maximize profits Laura should employ ________ workers.

|a. |two |

|b. |three |

|c. |four |

|d. |six |

|e. |five |

Figure 69-1: The Value of the Marginal Product Curve

[pic]

2. (Figure 69-1: The Value of the Marginal Product Curve) In the figure, if the market wage rate increases:

|a. |the VMPL curve would shift to the right. |

|b. |the profit-maximizing quantity of labor will increase. |

|c. |the VMPL curve would shift to the left. |

|d. |the profit-maximizing quantity of labor will decrease. |

|e. |there will be no change to the profit-maximizing quantity of labor. |

3. A decrease in the demand for pastry chefs may come about because of an:

|a. |increased concern for fitness. |

|b. |increase in the market wage rate for pastry chefs. |

|c. |increase in the productivity of pastry chefs. |

|d. |increase in the supply of other factors that pastry chefs use. |

|e. |decrease in the price of other factors that are employed with pastry chefs. |

4. Which of the following does not partially explain wage differentials?

|a. |different amounts of human capital |

|b. |compensating differentials |

|c. |differences in talent |

|d. |differences in physical capital |

|e. |perfectly competitive labor markets |

Figure 69-2: Demand for Bricklayers in a Perfectly Competitive Labor Market

[pic]

5. (Figure 69-2: Demand for Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100 per day, that price was determined by:

|a. |the firm hiring the bricklayers. |

|b. |demand and supply in the market for bricklayers. |

|c. |the government. |

|d. |where VMPLbricklayers = MPbricklayers × P of output. |

|e. |the union representing the bricklayers. |

6. Human capital is the improvement in ________ created by ________.

|a. |physical capital; technology |

|b. |labor; education and knowledge |

|c. |labor; physical capital |

|d. |labor; management |

|e. |labor; unemployment |

7. When labor is hired in a competitive market, the value of the marginal product of labor is computed by:

|a. |multiplying the price of the output by the marginal product of labor. |

|b. |multiplying the price of the output by the wage paid to labor. |

|c. |multiplying the wage paid to labor by the marginal product of labor. |

|d. |dividing the marginal product of labor by the price of the output. |

|e. |multiplying the price of the output by the total product of labor. |

8. People who have higher levels of human capital will tend to:

|a. |work only in nonunion jobs. |

|b. |receive higher salaries than those who have lower levels of human capital. |

|c. |earn salaries based on marginal costs of their labor. |

|d. |earn salaries higher than their values of marginal product. |

|e. |consume almost zero hours of weekly leisure. |

9. Stan has an employee, Barbara, who is the only female security guard at the company. Barbara is a “night owl” and loves to work the midnight to 8 a.m. shift for the company. Stan knows that working through the night is potentially more dangerous than working during the day, so he pays her an additional $2 per hour. This wage differential is likely an example of:

|a. |equilibrium wages. |

|b. |compensating differentials. |

|c. |efficiency wages. |

|d. |discrimination. |

|e. |union power. |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

|Quantity of Labor |Quantity of Wheat |Marginal Product of Labor |

|(workers) |(baskets) |(bushels per worker) |

|0 |0 | |

| | |19 |

|1 |19 | |

| | |17 |

|2 |36 | |

| | |15 |

|3 |51 | |

| | |13 |

|4 |64 | |

| | |11 |

|5 |75 | |

| | |9 |

|6 |84 | |

| | |7 |

|7 |91 | |

| | |5 |

|8 |96 | |

|Table 69-3: Employment and Output |

10. (Table 69-3: Employment and Output) In the table, if the price of a bushel of wheat is $10, then the value of the marginal product of the third worker is:

|a. |$15. |

|b. |$150. |

|c. |$170. |

|d. |$510. |

|e. |$10. |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

|Quantity |Total Product |

|of Labor |of Labor |

|(workers) |(cakes per worker) |

|0 |0 |

|1 |3 |

|2 |10 |

|3 |16 |

|4 |21 |

|5 |25 |

|6 |28 |

|Table 69-1: Total Product of Labor at |

|Debbie's Bakery |

11. (Table 69-1: Total Product of Labor at Debbie’s Bakery) Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. What is the value of the marginal product for the fourth worker?

|a. |five cakes |

|b. |$50 |

|c. |$210 |

|d. |21 cakes |

|e. |$250 |

12. An efficiency wage describes a wage rate that is:

|a. |equal to the marginal factor cost of the most efficient worker at the firm. |

|b. |efficient because it is exactly equal to the wage rate implied by the marginal productivity theory. |

|c. |determined by collective bargaining between unions and management. |

|d. |equal to the VMPL adjusted so as to make the structure of compensation more equitable. |

|e. |above the equilibrium wage and is paid in order to provide workers with an incentive to perform efficiently. |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

|Quantity |Total Product |

|of Labor | |

|0 |0 |

|1 |20 |

|2 |50 |

|3 |90 |

|4 |120 |

|5 |140 |

|6 |150 |

|7 |150 |

|8 |140 |

|Table 69-4: Value of the Marginal Product |

|of Labor and Demand |

13. (Table 69-4: Value of the Marginal Product of Labor and Demand) If the product price is $2 per unit, the value of the marginal product for the fifth unit of labor is:

|a. |$0. |

|b. |$20. |

|c. |$40. |

|d. |$60. |

|e. |$280. |

|Number |Output |

|of Droids |of Moisture |

| |(barrels per month) |

|0 |0 |

|1 |25 |

|2 |45 |

|3 |60 |

|4 |70 |

|5 |75 |

|Table 70-1: Droids and Moisture Output |

14. (Table 70-1: Droids and Moisture Output) Luke Skywalker operates a moisture farm on the planet Tatooine. The moisture farm utilizes droids. Luke's production function is given in the table. A barrel of moisture sells for 10 Republic Credits. A droid costs 65 Republic Credits per month to rent. How many droids should Luke rent?

|a. |one |

|b. |two |

|c. |three |

|d. |four |

|e. |five |

15. Which of the following explains actual wage differentials in labor markets?

I. differences in talent

II. different amounts of human capital

III. compensating differentials

|a. |I only. |

|b. |II only. |

|c. |III only. |

|d. |I and II only. |

|e. |I, II, and III. |

16. In the factor market for land, one will find equilibrium rental prices will be ________ the value of marginal product of land.

|a. |less than |

|b. |twice as high as |

|c. |slightly greater than |

|d. |unrelated to |

|e. |equal to |

17. An important assumption that underlies the marginal productivity theory of income distribution is that:

|a. |product markets are monopolistically competitive. |

|b. |factor markets are perfectly competitive. |

|c. |the relevant value of the marginal product is not the equilibrium value. |

|d. |the firm does not own any land or physical capital. |

|e. |the firm has wage-setting ability in the factor markets. |

Scenario 69-1: Perfectly Competitive Market

Assume the product market is perfectly competitive and that the labor market is also perfectly competitive. Also assume that the price of the firm's product is $5. The firm's total product with respect to labor is given in the table below.

|Quantity |Quantity |

|of Labor |of Output |

|(number | |

|of workers) | |

|0 |0 |

|1 |7 |

|2 |13 |

|3 |18 |

|4 |21 |

18. (Scenario 69-1: Perfectly Competitive Market) What is the value of marginal product of the third worker?

|a. |$5 |

|b. |$25 |

|c. |$18 |

|d. |$10 |

|e. |$90 |

19. When each factor is paid a payment equal to the value of marginal product of the last unit of that factor employed in the factor market as a whole, this is referred to as:

|a. |the compensating differential model. |

|b. |diminishing marginal product. |

|c. |the factor distribution of income. |

|d. |the efficiency wage model. |

|e. |the marginal productivity theory of income distribution. |

20. A nurse willing to work the midnight to 8 A.M. shift may earn more than she would earn if she worked 8 A.M. to 4 P.M. because of:

|a. |discrimination. |

|b. |market power. |

|c. |differences in human capital. |

|d. |efficiency wages. |

|e. |compensating differentials. |

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download