Question 1

Table 18-5 
-Refer to Table 18-5. How many workers should the firm hire?
A)1
B)2
C)3
D)4

Accepted Answer

The firm should hire 3 workers, as this is the point where the marginal product of labor begins to decrease. Hiring any more workers beyond this point would result in diminishing returns and decreased profits.

Question 2

Table 18-6 
-Refer to Table 18-6. What is the value for the cell labeled CC?
A)650
B)600
C)100
D)50

Accepted Answer

The answer of Table 18-6 
-Refer to Table 18-6. What...

Question 3

Table 18-7 
-Refer to Table 18-7. What is the value of the cell labeled GG?
A)$400
B)$100
C)$0
D)−$100

Accepted Answer

The cell labeled GG has a value of −$100, meaning it represents a loss. Thus, the best choice would be to avoid GG.

Question 4

Table 18-7 
-Refer to Table 18-7. The fact that the production function exhibits diminishing marginal productivity implies that
A)total production decreases beyond a certain level of output.
B)labor markets are not always competitive.
C)the additions to total output get smaller as more workers are hired.
D)marginal profit is negative.

Accepted Answer

Diminishing marginal productivity means that adding more workers leads to smaller increases in total output. This does not necessarily mean that total production will decrease, as option A suggests, nor does it have anything to do with labor market competition or marginal profit being negative, as options B and D suggest.

Question 5

Table 18-5 
-Refer to Table 18-5. The price of output is
A)$1.
B)$2.
C)$3.
D)$4.

Accepted Answer

The price of output is equal to the marginal revenue, which is constant at $2 for all levels of output. Therefore, the profit-maximizing choice is to produce 3 units of output, where marginal cost equals marginal revenue, resulting in a total revenue of $6 and a total cost of $4, for a profit of $2 ($6-$4).

Question 6

Table 18-7 
-Refer to Table 18-7. It is apparent from this table that increasing marginal product
A)occurs only after the first worker is hired.
B)occurs only after the second worker is hired.
C)occurs only after the third worker is hired.
D)never occurs.

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. It...

Question 7

Table 18-7 
-Refer to Table 18-7. The fact that the marginal product falls as the number of workers increases illustrates a property called
A)diminishing marginal product.
B)utility maximization.
C)supply and demand.
D)labor theory.

Accepted Answer

The fact that the marginal product falls as the number of workers increases is an illustration of the property known as diminishing marginal product. This means that as more units of a variable input (in this case, labor) are added to a fixed input (e.g. capital or land), the additional output produced by each additional unit of that input will eventually decrease, assuming other factors remain equal. This is a fundamental concept in economics and production theory.

Question 8

Table 18-7 
-Refer to Table 18-7. What is the value of the cell labeled JJ?
A)-$300
B)-$200
C)-$100
D)$0

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. What...

Question 9

Table 18-7 
-Refer to Table 18-7. What is the value for the cell labeled FF?
A)30
B)40
C)100
D)400

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. What...

Question 10

Table 18-A 
-Refer to Table 18-4. The price of output is
A)$400.
B)$3.
C)$2.
D)$1.

Accepted Answer

The answer of Table 18-A 
-Refer to Table 18-4. The...

Question 11

Table 18-7 
-Refer to Table 18-7. What is the market price of the final good?
A)$5
B)$6
C)$8
D)$10

Accepted Answer

The market price of the final good is the price at which it is sold to the final consumer. In this case, it is $10, which is the price paid by consumer C for the final good. Therefore, the answer is D.

Question 12

Table 18-A 
-Refer to Table 18-4. How many workers should the firm hire?
A)1
B)2
C)3
D)4

Accepted Answer

The firm should hire two workers to maximize profits. At this level of employment, the marginal revenue product (MRP) of the second worker is greater than the marginal factor cost (MFC), resulting in an increase in profits. Hiring any additional workers would result in a decrease in profits, as their MRP is less than their MFC.

Question 13

Table 18-7 
-Refer to Table 18-7. To maximize its profit, how many workers will the firm hire?
A)2
B)3
C)4
D)5

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. To...

Question 14

Table 18-6 
-Refer to Table 18-6. What is the value for the cell labeled AA?
A)$600
B)$500
C)$400
D)$300

Accepted Answer

The answer of Table 18-6 
-Refer to Table 18-6. What...

Question 15

Table 18-7 
-Refer to Table 18-7. What is the value of the cell labeled II?
A)-$100
B)$100
C)$200
D)$300

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. What...

Question 16

Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude's production function is detailed in the table below. 
-Refer to Table 18-8. What is the marginal product of the third worker?
A)220 students
B)73.33 students
C)50 students
D)30 students

Accepted Answer

The marginal product of the third worker is 50 students, which is the additional number of students produced when the third worker is hired. Hiring the fourth worker would result in a marginal product of only 30 students, which means that the marginal product of the fourth worker is decreasing, and it would not be profitable to hire another worker beyond the third one. Therefore, the best choice would be to hire three workers.

Question 17

Table 18-7 
-Refer to Table 18-7. What is the value for the cell labeled BB?
A)80 units
B)100 units
C)180 units
D)200 units

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. What...

Question 18

Table 18-7 
-Refer to Table 18-7. To maximize its profit, the firm will hire workers as long as the value of the marginal product of labor equals or exceeds
A)$100.
B)$200.
C)$400.
D)$500.

Accepted Answer

The answer of Table 18-7 
-Refer to Table 18-7. To...

Question 19

Table 18-6 
-Refer to Table 18-6. What is the value for the cell labeled DD?
A)−$100
B)$300
C)$100
D)$50

Accepted Answer

The answer of Table 18-6 
-Refer to Table 18-6. What...

Question 20

Table 18-6 
-Refer to Table 18-6. What is the value for the cell labeled BB?
A)$300
B)$200
C)$100
D)−$100

Accepted Answer

The answer of Table 18-6 
-Refer to Table 18-6. What...

Quiz 18: The Markets for the Factors of Production

Table 18-5 -Refer to Table 18-5. How many workers should the firm hire?

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled CC?

Table 18-7 -Refer to Table 18-7. What is the value of the cell labeled GG?

Table 18-7 -Refer to Table 18-7. The fact that the production function exhibits diminishing marginal productivity implies that

Table 18-5 -Refer to Table 18-5. The price of output is

Table 18-7 -Refer to Table 18-7. It is apparent from this table that increasing marginal product

Table 18-7 -Refer to Table 18-7. The fact that the marginal product falls as the number of workers increases illustrates a property called

Table 18-7 -Refer to Table 18-7. What is the value of the cell labeled JJ?

Table 18-7 -Refer to Table 18-7. What is the value for the cell labeled FF?

Table 18-A -Refer to Table 18-4. The price of output is

Table 18-7 -Refer to Table 18-7. What is the market price of the final good?

Table 18-A -Refer to Table 18-4. How many workers should the firm hire?

Table 18-7 -Refer to Table 18-7. To maximize its profit, how many workers will the firm hire?

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled AA?

Table 18-7 -Refer to Table 18-7. What is the value of the cell labeled II?

Table 18-7 -Refer to Table 18-7. What is the value for the cell labeled BB?

Table 18-7 -Refer to Table 18-7. To maximize its profit, the firm will hire workers as long as the value of the marginal product of labor equals or exceeds

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled DD?

Table 18-6 -Refer to Table 18-6. What is the value for the cell labeled BB?