Question 1

A production process is defined as

Accepted Answer

The answer of A production process is defined as
...

Question 2

Opportunity wage refers to the

Accepted Answer

Opportunity wage refers to the highest wage an individual would earn in his or her best alternative job. It represents the opportunity cost of working in a particular job and not pursuing the next best alternative.

Question 3

$$\begin{array}{l}
\begin{array} { c c c c } 
\text { Output (units) } & \text { Labor (units) } & \text { Output (units) } & \text { Capital (units) } \
10 & 1 & 20 & 1 \
26 & 2 & 56 & 2 \
38 & 3 & 86 & 3
\end{array}\
\text { Table 30.5 }
\end{array}$$ Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5, what is the cost efficiency of the second unit of capital?

Accepted Answer

The cost efficiency of the second unit of capital is calculated by dividing the additional output generated by the second unit of capital by its cost. The additional output generated by the second unit of capital is 56 - 20 = 36 units. The cost of one unit of capital is $6. Therefore, the cost efficiency is 36 units / $6 = 6 units per $1 of cost.

Question 4

The efficiency decision involves choosing the input combination or process that

Accepted Answer

Efficiency involves finding the input combination or process that results in the least cost for a given output. This means minimizing the cost of inputs and maximizing the productivity of those inputs. Therefore, choice C is the best option because it directly addresses this principle.

Question 5

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table $30.4$ Hairstyling Appointments and Revenues Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided, compute the marginal physical product (MPP) of the hairstylists, total revenue, and the marginal revenue product of the stylists, assuming that a hairstylist Charges $60 per appointment.In Table 30.4, what is the marginal revenue product of the second hairstylist?

Accepted Answer

The marginal physical product (MPP) of each hairstylist can be calculated by taking the difference in the number of hairstyling appointments between two consecutive columns. For example, the MPP of the second hairstylist is 60 - 40 = 20. 
Total revenue is simply the number of appointments multiplied by the price per appointment, which is $60 in this case. 
The marginal revenue product (MRP) of each stylist can be calculated by multiplying the MPP by the price per appointment. For example, the MRP of the second hairstylist is 20 x $60 = $1,200 per week. 
Based on the table, the best choice would be to hire three hairstylists, as this would result in the highest total revenue and MRP. Hiring a fourth stylist would result in diminishing marginal returns and a decrease in MRP.

Question 6

$$\begin{array}{l}
\begin{array} { c c c c } 
\text { Output (units) } & \text { Labor (units) } & \text { Output (units) } & \text { Capital (units) } \
10 & 1 & 20 & 1 \
26 & 2 & 56 & 2 \
38 & 3 & 86 & 3
\end{array}\
\text { Table 30.5 }
\end{array}$$ Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5, what is the cost efficiency of the second unit of labor?

Accepted Answer

The answer of \[\begin{array}{l}
\begin{array} { c c c c }...

Question 7

According to the In The News article "Mauer, Twins Agree to Eight-Year, $184 Million Extension," high salaries of professional baseball player are due to

Accepted Answer

The high salaries of professional baseball players are due to their high marginal revenue product, which is the additional revenue that a player generates for their team. Players like Joe Mauer, who signed an eight-year, $184 million extension, bring in significant revenue through their on-field performance, fan appeal, and merchandise sales.

Question 8

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table 30.3 Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.3, the marginal physical product of the third worker hired is

Accepted Answer

The marginal physical product (MPP) of the third worker is the additional output produced by the third worker, calculated as the difference in total output when the third worker is hired compared to when only two workers were employed. From the table, the total output with two workers is 10 units per hour, and with three workers, it is 15 units per hour. Therefore, the MPP of the third worker is 15 - 10 = 5 units per hour.

Question 9

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table $30.4$ Hairstyling Appointments and Revenues Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided, compute the marginal physical product (MPP) of the hairstylists, total revenue, and the marginal revenue product of the stylists, assuming that a hairstylist charges $60 per appointment.In Table 30.4, suppose a hairstylist is paid $600 per week.How many hairstylists should a profit-maximizing salon hire?

Accepted Answer

The marginal physical product (MPP) is the additional output generated by an additional stylist. Total revenue is calculated by multiplying the total output by the price per appointment ($60). The marginal revenue product (MRP) is the additional revenue generated by hiring an additional stylist. To maximize profit, a salon should hire stylists as long as their MRP is greater than or equal to their wage ($600). - For the first stylist, MPP = 60 appointments, total revenue = 60 appointments * $60/appointment = $3600, MRP = $3600.- For the second stylist, MPP = 80 - 60 = 20 appointments, total revenue = 80 * $60 = $4800, MRP = $4800 - $3600 = $1200.- For the third stylist, MPP = 90 - 80 = 10 appointments, total revenue = 90 * $60 = $5400, MRP = $5400 - $4800 = $600.- For the fourth stylist, MPP = 90 - 90 = 0 appointments, total revenue remains $5400, MRP = $5400 - $5400 = $0.A profit-maximizing salon should hire stylists as long as their MRP ($3600, $1200, $600) is greater than or equal to their wage ($600). Therefore, the salon should hire 3 stylists, as the MRP of the third stylist exactly matches the wage, but the MRP of the fourth stylist falls below the wage.

Question 10

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table 30.3 Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.3, the marginal revenue product of the second worker hired is

Accepted Answer

The marginal revenue product (MRP) of the second worker is calculated by taking the difference in total output when the second worker is added (which is 6 units, from 4 to 10) and multiplying it by the product price ($4). So, MRP = 6 units * $4/unit = $24.

Question 11

In general, it can be said that leisure is a "free good."
The value of any activity will be at least the value of the opportunity cost.Therefore, the best estimate of the value of an hour of leisure is the hourly wage that could have been earned.

Accepted Answer

Leisure is not considered a "free good" because it has an opportunity cost, which is the value of what could have been earned or accomplished in that time, such as the hourly wage one foregoes to enjoy leisure.

Question 12

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table 30.3 Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.3, the contribution to total revenue of the fourth worker hired is

Accepted Answer

The contribution to total revenue of a worker is the marginal product of labor multiplied by the price of the product.

In this case, assuming that the marginal product of labor is as in Table 30.3, the contribution to total revenue of the fourth worker hired is:
(12 units - 8 units) x $4 = 16 units x $4 = $64

Dividing this by the number of hours worked by the fourth worker (4), we get:
$64/4 = $16 per hour

Question 13

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table 30.3 Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.3, how many workers should be hired?

Accepted Answer

The answer of ...

Question 14

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table $30.4$ Hairstyling Appointments and Revenues Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided, compute the marginal physical product (MPP) of the hairstylists, total revenue, and the marginal revenue product of the stylists, assuming that a hairstylist charges $60 per appointment.In Table 30.4, as more stylists are hired,

Accepted Answer

As more stylists are hired, the marginal physical product of each additional stylist decreases, indicating diminishing returns. This means that the additional output produced by each additional stylist is decreasing. Additionally, there is no information given about changes in the total revenue or marginal revenue product of the stylists, so we cannot determine whether there are economies or diseconomies of scale or whether MRP increases.

Question 15

The opportunity wage is often a better measure of executive pay than

Accepted Answer

The opportunity wage takes into account the difficulty in quantifying executive output, whereas the other options are not relevant to measuring executive pay.

Question 16

One In the News article is titled "Challenging Work and Corporate Responsibility Will Lure MBA Grads." In the headline, which of the following determinants of labor supply is most explicitly mentioned?

Accepted Answer

The determinant of labor supply mentioned in the headline is "tastes," as it refers to the preferences and values of MBA graduates in terms of the type of work and corporate responsibility they seek in a job. The other options, such as taxes, prices of consumer goods, and expectations regarding prices of consumer goods, are not mentioned in the headline and are not relevant to the topic of the article.

Question 17

Joe Sabia, an assistant professor of public policy at American University in Washington, DC, says that a 10 percent increase in the minimum wage reduces retail employment by 1 percent and reduces employment among young workers by 3.4 percent.If President Obama is successful increasing the minimum wage by 30 percent as explained in "Obama Wants $9.50 Minimum Wage," we can expect

Accepted Answer

Based on Joe Sabia's research, a 30 percent increase in minimum wage would likely result in retail employment decreasing by about 3 percent and young workers' employment decreasing by about 10 percent. This scenario does not necessarily indicate an increase in overall unemployment or prices, so options A, B, and D are not accurate predictions.

Question 18

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table $30.4$ Hairstyling Appointments and Revenues Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided, compute the marginal physical product (MPP) of the hairstylists, total revenue, and the marginal revenue product of the stylists, assuming that a hairstylist Charges $60 per appointment.In Table 30.4, what is the marginal physical product of the fourth hairstylist?

Accepted Answer

The marginal physical product of the fourth hairstylist is 0, as adding a fourth stylist does not increase the total number of appointments that can be scheduled. Therefore, the salon should not hire a fourth stylist as it would not increase revenue.

Question 19

Number of stylist (per week)	total output(per week)	marginal physical product (output per stylist)	total revenue(dollars per week)	marginal revenue product (dollars per stylist)
0	0	......	$0	........
1	60	______	______	______
2	80	______	______	______
3	90	______	______	______
4	90	______	______	______

Table $30.4$ Hairstyling Appointments and Revenues Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided, compute the marginal physical product (MPP) of the hairstylists, total revenue, and the marginal revenue product of the stylists, assuming that a hairstylist charges $60 per appointment.In Table 30.4 suppose a hairstylist is paid $700 per week.How many hairstylists should a profit-maximizing salon hire?

Accepted Answer

The salon should hire 2 stylists. The marginal revenue product (MRP) for the second stylist is $1,200 (20 additional appointments x $60), which is greater than the $700 wage. Hiring a third stylist results in an MRP of $600 (10 additional appointments x $60), which is less than the wage, so hiring more than 2 stylists is not profitable.

Question 20

When an individual's MRP is not measurable, his or her market wage is usually determined by

Accepted Answer

When an individual's MRP is not measurable, his or her market wage is usually determined by his or her opportunity wage, which is the wage rate that the individual could earn in his or her next best alternative job. This is because employers are willing to pay a wage that is competitive with what the individual could earn in another job. Therefore, the market wage is determined by the individual's opportunity cost.

Number of worker (per hour)	total output(per hour)	marginal physical product (output per worker)	total revenue(dollars per hour)	marginal revenue product (dollars per worker)
1	4	......	______	........
2	10	______	______	______
3	15	______	______	______
4	19	______	______	______
5	22	______	______	______

Quiz 16: The Labor Market