Question 1

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?
A)$160
B)$640
C)$1,600
D)$2,400

Accepted Answer

The answer of Scenario 18-1
Harry owns a snow-removal business. He...

Question 2

Table 18-3 
-Refer to Table 18-3. For Firm D, the marginal product of labor is
A)increasing.
B)constant.
C)decreasing.
D)negative.

Accepted Answer

The answer of Table 18-3 
-Refer to Table 18-3. For...

Question 3

Table 18-3 
-Refer to Table 18-3. Which firm's production function exhibits constant marginal product?
A)Firm A
B)Firm B
C)Firm C
D)Firm D

Accepted Answer

The answer of Table 18-3 
-Refer to Table 18-3. Which...

Question 4

Table 18-3 
-Refer to Table 18-3. For Firm C, the marginal product of labor is
A)increasing.
B)constant.
C)decreasing.
D)negative.

Accepted Answer

The answer of Table 18-3 
-Refer to Table 18-3. For...

Question 5

Table 18-3 
-Refer to Table 18-3. For Firm A, the marginal product of labor is
A)increasing.
B)constant.
C)decreasing.
D)negative.

Accepted Answer

The answer of Table 18-3 
-Refer to Table 18-3. For...

Question 6

Table 18-3 
-Refer to Table 18-3. Which firm's production function exhibits positive but diminishing marginal product?
A)Firm A
B)Firm B
C)Firm C
D)Firm D

Accepted Answer

Firm B's production function exhibits positive but diminishing marginal product, as shown by the increasing marginal product up to a point and then decreasing marginal product.

Question 7

Table 18-2 
-Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $2.50, how many workers would the firm employ if the weekly wage rate is $375?
A)2
B)3
C)4
D)5

Accepted Answer

The answer of Table 18-2 
-Refer to Table 18-2. The...

Question 8

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?
A)3
B)4
C)5
D)6

Accepted Answer

The answer of Table 18-1 
-Refer to Table 18-1. Suppose...

Question 9

Table 18-3 
-Refer to Table 18-3. Which firm's production function exhibits negative marginal product?
A)Firm A
B)Firm B
C)Firm C
D)Firm D

Accepted Answer

The answer of Table 18-3 
-Refer to Table 18-3. Which...

Question 10

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How many days of labor should the firm hire?
A)3
B)4
C)5
D)6

Accepted Answer

To maximize profits, the firm should produce at the point where its marginal revenue (MR) equals its marginal cost (MC). From the table, when the firm hires 5 days of labor, it produces 40 units of output with a total cost of $250 (5*$50). This gives us an average cost of $6.25 per unit. At 4 days of labor, the firm produces 35 units of output with a total cost of $200 (4*$50). This gives us an average cost of $5.71 per unit. At 6 days of labor, the firm produces 45 units of output with a total cost of $300 (6*$50). This gives us an average cost of $6.67 per unit. Therefore, hiring 4 days of labor will give the firm the lowest unit cost and the highest profit margin.

Question 11

Table 18-1 
-Refer to Table 18-1. Suppose that the firm pays its workers $45 per day. Each unit of output sells for $10. How many days of labor should the firm hire?
A)1
B)2
C)3
D)4

Accepted Answer

The answer of Table 18-1 
-Refer to Table 18-1. Suppose...

Question 12

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 second worker?
A)$200
B)$240
C)$800
D)$960

Accepted Answer

The answer of Scenario 18-1
Harry owns a snow-removal business. He...

Question 13

Table 18-1 
-Refer to Table 18-1. What is the marginal product of the fourth worker?
A)5
B)7.5
C)8
D)30

Accepted Answer

The answer of Table 18-1 
-Refer to Table 18-1. What...

Question 14

Table 18-2 
-Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $10, how many workers would the firm employ if the weekly wage rate is $375?
A)2
B)3
C)4
D)5

Accepted Answer

The answer of Table 18-2 
-Refer to Table 18-2. The...

Question 15

Table 18-2 
-Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $5, how many workers would the firm employ if the weekly wage rate is $375?
A)1
B)2
C)3
D)4

Accepted Answer

The answer of Table 18-2 
-Refer to Table 18-2. The...

Question 16

Table 18-3 
-Refer to Table 18-3. For Firm B, the marginal product of labor is
A)increasing.
B)constant.
C)decreasing.
D)negative.

Accepted Answer

As the number of workers increases from 0 to 1, the output increases from 0 to 50. However, as more workers are added, the increase in output becomes smaller until it reaches a maximum at 4 workers with an output of 250. Beyond that point, the marginal product of labor decreases, indicating diminishing returns to labor. Therefore, the correct answer is C) decreasing.

Question 17

Table 18-1 
-Refer to Table 18-1. What is the marginal product of the third worker?
A)7
B)8
C)25
D)75

Accepted Answer

The answer of Table 18-1 
-Refer to Table 18-1. What...

Question 18

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. What is the total productivity of three workers?
A)12
B)22
C)30
D)42

Accepted Answer

The answer of Scenario 18-1
Harry owns a snow-removal business. He...

Question 19

Table 18-1 
-Refer to Table 18-1. What is the marginal product of the second worker?
A)8
B)9
C)10
D)18

Accepted Answer

The answer of Table 18-1 
-Refer to Table 18-1. What...

Question 20

Table 18-2 
-Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $8, how many workers would the firm employ if the weekly wage rate is $800?
A)1
B)2
C)3
D)4

Accepted Answer

To determine the number of workers the firm would employ, we need to calculate the marginal product of labor (MPL) and the marginal revenue product (MRP) for each level of employment.

MPL is calculated by finding the change in output (bracelets) as a result of adding one more worker. For example, when employing 2 workers, the firm can assemble 60 – 40 = 20 more bracelets than when employing only 1 worker, so MPL = 20.

MRP is calculated by multiplying the number of bracelets produced by the price per bracelet. For example, when employing 2 workers, the firm produces 60 bracelets and can sell them for $8 each, so MRP = 60 × $8 = $480.

Table 18-2 only gives the total output for each level of employment, so we need to calculate the change in output for each additional worker. This information is shown in the table below:

| Workers | Bracelets produced | Change in output | MPL |
|---------|-------------------|------------------|-----|
| 1       | 40                | N/A              | N/A |
| 2       | 60                | 20               | 20  |
| 3       | 72                | 12               | 12  |
| 4       | 78                | 6                | 6   |

Using this information, we can calculate the MRP for each level of employment:

| Workers | Bracelets produced | MRP     |
|---------|-------------------|---------|
| 1       | 40                | $320    |
| 2       | 60                | $480    |
| 3       | 72                | $576    |
| 4       | 78                | $624    |

To determine the optimal level of employment, the firm should hire workers up to the point where the MRP of the last worker hired equals the wage rate. In this case, the wage rate is $800 per week.

Based on the table above, we can see that the MRP for 3 workers is $576, which is less than the wage rate of $800. However, the MRP for 4 workers is $624, which is greater than the wage rate. Therefore, the firm should employ 4 workers to maximize profits.

Quiz 18: The Markets for the Factors of Production

Table 18-3 -Refer to Table 18-3. For Firm D, the marginal product of labor is

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

Table 18-3 -Refer to Table 18-3. For Firm C, the marginal product of labor is

Table 18-3 -Refer to Table 18-3. For Firm A, the marginal product of labor is

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

Table 18-2 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $2.50, how many workers would the firm employ if the weekly wage rate is $375?

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output sells for $15. How many days of labor should the firm hire?

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

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of output sells for $20. How many days of labor should the firm hire?

Table 18-1 -Refer to Table 18-1. Suppose that the firm pays its workers $45 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Table 18-1 -Refer to Table 18-1. What is the marginal product of the fourth worker?

Table 18-2 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $10, how many workers would the firm employ if the weekly wage rate is $375?

Table 18-2 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $5, how many workers would the firm employ if the weekly wage rate is $375?

Table 18-3 -Refer to Table 18-3. For Firm B, the marginal product of labor is

Table 18-1 -Refer to Table 18-1. What is the marginal product of the third worker?

Table 18-1 -Refer to Table 18-1. What is the marginal product of the second worker?

Table 18-2 -Refer to Table 18-2. The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $8, how many workers would the firm employ if the weekly wage rate is $800?