Question 1

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods?

Accepted Answer

The demand for factors of production (such as labor, land, and capital) is derived from the demand for final goods and services that these factors produce. This is because businesses demand factors of production based on the demand for the final goods and services they are used to produce. The demand for final goods is not derived from the demand for factors of production; rather, it is determined by consumers' tastes, preferences, and incomes.

Question 2

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true?

Accepted Answer

D

Question 3

In 1986, Roger Clemens pitched 254 innings and finished with a 24-4 record during the regular season. He struck out 238 batters, recorded an earned run average of 2.148 and a WHIP (walks plus hits per inning pitched) of 0.969. He earned $340,000, which converts to $644,998 in 2007 dollars. In 2007, Roger Clemens pitched 99 innings and finished with a record of 6-6 during the regular season. He recorded 68 strikeouts, an ERA of 4.18 and a WHIP of 1.33. He was paid $17,690,413 for the 2007 season. Which of the following is the most likely explanation for the increase in Clemens? salary from 1986 to 2007?

Accepted Answer

The most likely explanation for the increase in Roger Clemens' salary from 1986 to 2007 is that the marginal revenue associated with an additional win in baseball increased. This reflects the overall growth in the revenue of the sport, leading to higher salaries for players.

Question 4

In Major League Baseball, a player's WAR (wins above replacement) is a rough measure of the player's marginal product of labor. Specifically, WAR measures how many additional wins a player's performance would register for the team above the performance of the average player at his position. For 2015, center fielder Mike Trout of the Los Angeles Angels had a war of 7.55. (Assume that Trout's performance in 2016 is expected to be exactly the same as in 2015.) Suppose an additional win is worth $1.7 million to the Angels in 2016. What is Trout's value of marginal product of labor in 2016? Explain your answer.

Accepted Answer

Trout's value of marginal product of labor is calculated by multiplying his WAR (7.55) by the value of an additional win ($1.7 million), which equals $12.84 million.

Question 5

The table below lists salary and ?productivity? data for two Major League Baseball pitchers, Sandy Koufax and Clayton Kershaw. The players are not contemporaries; their careers were roughly a half-century apart. Nonetheless, each pitcher is/was considered the dominant pitcher of his era. Comparing productivity for Koufax?s 1963 season to Kershaw?s 2016 season, Koufax was more productive (in terms of wins, complete games, innings pitched and strikeouts), yet Kershaw?s salary was 126 times Koufax?s salary, adjusting for inflation. What is the most likely explanation for the salary differential between Koufax and Kershaw?

Accepted Answer

The answer of The table below lists salary and ?productivity?...

Question 6

Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.

Accepted Answer

The correct answer is D because the decision to work more or less when wages increase significantly depends on the individual's valuation of leisure versus income. Some might work more to earn more, while others might work less, valuing their free time more now that they can afford to.

Question 7

The following table shows the demand and supply of labor in the steel manufacturing industry.
  a) What is the equilibrium wage rate and employment level in the industry? Illustrate graphically.
b) If the labor demand shifts to the right, without any change in the labor supply curve, what is likely to happen to the equilibrium wage and the employment level? Explain your answer with the help of a suitable diagram.
c) If the labor supply curve shifts to the left, without any change in the labor demand curve, what is likely to happen to the equilibrium wage and employment level? Explain your answer with the help of a suitable diagram.

Accepted Answer

The answer of The following table shows the demand and...

Question 8

In Oettinger's paper studying the labor supply decisions of stadium vendors, he considered the following complication. For games played on weekends, for games played in good weather, and for games where the Rangers' opponent was popular and/or enjoying on-field success, the potential to earn more during the game increased, but all other vendors realized this as well. In essence, a vendor might actually make less during a "high total revenue potential" game if lots of other vendors decided to work that game as well. The likelihood of finding that vendors were more likely to "participate"for high total revenue potential games ________ by accounting for the strategic behavior of other vendors. Explain your answer.

Accepted Answer

Actual vendors have to weigh the potential for earning more because there are more people at the game (more total revenue potential) against the fact that more vendors will be competing for these revenues.

Question 9

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware.
 
-Refer to the scenario above. Before this migration, the employment in Delaware was equal to ________, and after this migration the employment will equal ________.

Accepted Answer

The scenario implies a migration that increases employment in Delaware from 25,000 to 30,000.

Question 10

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination?

Accepted Answer

Taste-based discrimination involves a bias against a group that leads employers to make decisions that may not be economically rational, such as hiring a less qualified candidate due to personal prejudices, even at the cost of lower profits. Statistical discrimination, on the other hand, involves making decisions based on group averages or statistics, such as assuming individuals from certain groups have specific characteristics, with the intention of making profit-maximizing decisions, not out of personal bias but rather based on perceived statistical realities.

Question 11

Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150.
 
-Refer to the scenario above. If the firm decides to employ one worker, and the wage is $40,000 per month, the firm?s maximum profit is ________.

Accepted Answer

The answer of Victoria Corp. makes running shoes by employing...

Question 12

Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150.
 
-Refer to the scenario above. If the firm decides to employ two workers, and the wage for each worker is $40,000 per month, the firm's maximum profit is ________.

Accepted Answer

With two workers, the firm incurs a total wage cost of $80,000 ($40,000 per worker). To determine the firm's maximum profit, we would need to know the revenue generated by employing these two workers. Since the scenario details are not provided, we can't calculate the exact profit. However, the correct answer format suggests a hypothetical scenario where, if the firm's revenue with two workers minus the wage cost equals $10,000, then the maximum profit would be $10,000.

Question 13

Suppose a firm uses land, labor, and capital for its production process. If it is renting the equilibrium quantity of all three factors of production, then which of the following conditions will be true?

Accepted Answer

In an equilibrium state, a firm will allocate its budget across all factors of production (land, labor, and capital) in such a way that the marginal product per dollar spent on each is equal. This ensures the most efficient use of resources.

Question 14

In an economy, if the money supply is $100,000, currency in circulation is $50,000, amount in savings accounts is $18,000, amount in travelers? checks is $12,000, and the amount in money market accounts is $9,000, then what is the amount held in checking accounts in the economy?

Accepted Answer

The answer of In an economy, if the money supply...

Question 15

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180.
-Refer to the scenario above. What is the nominal GDP of the economy in 2015?

Accepted Answer

Nominal GDP is calculated by multiplying the quantity of goods produced by their current prices. In 2015, the economy produced 275 cell phones, each at $200, so the nominal GDP is 275 * $200 = $55,000.

Question 16

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180.
-Refer to the scenario above. Using 2015 as the base year, what was the real GDP of the economy in 2016?

Accepted Answer

The answer of An economy produces only cell phones. In...

Question 17

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180.
-Refer to the scenario above. Using 2015 as the base year, what was the real GDP of the economy in 2015?

Accepted Answer

Real GDP in 2015 is calculated using the base year prices, which are the same as the current year prices in 2015. Therefore, Real GDP = 275 cell phones * $200 = $55,000.

Question 18

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180.
-Refer to the scenario above. Using 2016 as the base year, what was the real GDP of the economy in 2015?

Accepted Answer

Real GDP for a given year is calculated by taking the quantity of goods produced in that year and multiplying it by the base year's prices. In this case, the base year is 2016, where the price of each cell phone is $180. In 2015, the economy produced 275 cell phones. Therefore, the real GDP for 2015, using 2016 prices, is 275 cell phones * $180/cell phone = $49,500.

Question 19

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each.
-Refer to the scenario above. The nominal GDP in Bookland in 1990 was ________.

Accepted Answer

Nominal GDP is calculated by multiplying the quantity of goods produced by their current prices. In 1990, Bookland produced 10,000 books at $10 each, so the nominal GDP is 10,000 books * $10/book = $100,000.

Question 20

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each.
-Refer to the scenario above. The nominal GDP in Bookland in 1991 was ________.

Accepted Answer

Nominal GDP is calculated by multiplying the quantity of goods produced by their current market prices. In 1991, Bookland produced 11,000 books at a market price of $12 each, so the nominal GDP is 11,000 * $12 = $132,000.

Quiz 9: Markets for Factors of Production and the Monetary System

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods?

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true?

Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to , and after this migration the employment will equal .

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination?

Suppose a firm uses land, labor, and capital for its production process. If it is renting the equilibrium quantity of all three factors of production, then which of the following conditions will be true?

In an economy, if the money supply is $100,000, currency in circulation is $50,000, amount in savings accounts is $18,000, amount in travelers? checks is $12,000, and the amount in money market accounts is $9,000, then what is the amount held in checking accounts in the economy?

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. What is the nominal GDP of the economy in 2015?

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1990 was ________.

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1991 was ________.

Quiz 9: Markets for Factors of Production and the Monetary System

Which of the following correctly identifies the difference between the demand for factors of production and the demand for final goods?

Suppose a firm sells its product in a competitive market. If the ongoing wage rate in a competitive labor market is $30 and the market price of a firm's product is $2, then which of the following statements is true?

Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to ________, and after this migration the employment will equal ________.

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination?

Suppose a firm uses land, labor, and capital for its production process. If it is renting the equilibrium quantity of all three factors of production, then which of the following conditions will be true?

In an economy, if the money supply is $100,000, currency in circulation is $50,000, amount in savings accounts is $18,000, amount in travelers? checks is $12,000, and the amount in money market accounts is $9,000, then what is the amount held in checking accounts in the economy?

An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above. What is the nominal GDP of the economy in 2015?

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1990 was ________.

Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above. The nominal GDP in Bookland in 1991 was ________.

The labor market in Delaware is depicted in the following figure. Suppose 10,000 out-of-state workers move to Delaware. -Refer to the scenario above. Before this migration, the employment in Delaware was equal to , and after this migration the employment will equal .