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Exam 18: The Markets for the Factors of Production

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Question 121

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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?

A) $200
B) $8
C) $5
D) There is insufficient information available to answer this question.

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Question 122

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John owns a number of hot dog stands in New York City. He hires workers to sell hot dogs at his stands. Which of the following events will lead to a decrease in John's demand for hot dog vendors?

A) Hollywood glamorization of a new movie about a hot dog vendor leads hundreds of high-school students in New York City to apply for a job at John's.
B) The price of hot dogs falls.
C) The local hot dog vendors form a union increasing hot dog vendor wages.
D) The demand curve for hot dogs shifts to the right.

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Question 123

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Carolyn's Pottery Shop produces vases that sell for $15 each. Assume that labor is the only input that varies for the firm. If Carolyn hires 10 workers, she can produce and sell 500 vases per week. If she hires 11 workers, she can produce and sell 560 vases per week. Carolyn pays each of her workers $400 per week. Which of the following is correct?

Labor-saving technology causes which of the following?

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?

Table 18-11 Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. Suppose that the firm suffers a loss of some of their technology such as the theft of their industrial mixers. After the theft, MadeFromScratch employees produce fewer cupcakes than they could before because they must mix the cupcake batter by hand rather than using the high-speed mixers. Because of this change, the firm's

If the selling price of a bushel of cranberries rises, we would expect the demand for labor in the cranberry industry to

Scenario 18-2 Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market. -Refer to Scenario 18-2. When Gertrude participates in the labor market to hire crew members for her boats, she is most likely considered a

Table 18-3 -Refer to Table 18-3. Which firm's production function exhibits negative marginal product?

Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. If doctors' offices adopt new labor­augmenting technologies, what happens in the market for nurses?

An increase in the supply of labor has the effect of decreasing the

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

Figure 18-9 -Refer to Figure 18-9. If the price of apples decreases, the equilibrium wage will

A highly-paid research scientist works 12 hours a day, while a common laborer works only 5 hours a day. Offer a likely explanation, using the concept of opportunity cost.

Scenario 18-1 Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel twelve driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day. -Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the third worker?

Consider the market for capital equipment. Suppose the value of the marginal product of capital equipment increases. Holding all else constant, the equilibrium rental price of capital equipment will

An increase in the wages paid to high-school student who detassle corn will increase the labor supply of high-school students who weed soybean fields, all else equal.

Which of the following events can not cause the labor-supply curve to shift?

Dan owns one of the many bakeries in New York City. Which of the following events will lead to an increase in Dan's demand for the services of bakers?

A worker's contribution to a firm's revenue is measured directly by the worker's