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Table 18-7 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. -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.

E) None of the above
F) All of the above

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For a worker, the opportunity cost of an hour of leisure


A) rises by $8 when his wage rises by $8 per hour.
B) falls by $8 when his wage rises by $8 per hour.
C) is the same for a celebrity talk-show host as it is for a teacher.
D) is determined by factors that are unrelated to his hourly wage.

E) A) and C)
F) A) and B)

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Angie was the last worker hired by a firm that is competitive in the labor market. The labor market always is in equilibrium. The firm sells its output for $24 per unit. When Angie was hired, the firm's output increased by 2 units per hour as a result. What is Angie's hourly wage?

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Since the labor mark...

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Economists define capital as the


A) accumulation of goods produced in the past that are being used in the present to produce new goods and services.
B) goods and services that are most affected by changes in technology.
C) factors of production that can be rented by firms.
D) factors of production that can be purchased by firms.

E) A) and B)
F) A) and C)

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What causes the labor demand curve to shift? (i) Changes in productivity (ii) Changes in wages (iii) Changes in output prices


A) (i) and (ii)
B) (ii) and (iii)
C) (i) and (iii)
D) All of the above are correct.

E) C) and D)
F) B) and D)

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Suppose that the labor market for high school chemistry teachers is initially in equilibrium. Chemistry teachers use laboratory chemicals as an important part of their jobs. New environmental regulations ban the use of many chemicals, which means that fewer laboratory chemicals are available for high school chemistry teachers to use in their jobs. In the market for high school chemistry teachers, the equilibrium wage


A) increases because the marginal productivity of high school chemistry teachers increases.
B) decreases because the marginal productivity of high school chemistry teachers decreases.
C) increases because the supply of high school chemistry teachers increases.
D) decreases because the supply of high school chemistry teachers decreases.

E) A) and D)
F) None of the above

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Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. Table 18-B Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day. -Refer to Table 18-11. Assume that MadeFromScratch is a competitive, profit-maximizing firm. If the market price of cupcakes increases from $2.00 to $2.50, how many workers would the firm then hire? A) 2 workers B) 3 workers C) 4 workers D) 5 workers -Refer to Table 18-11. Assume that MadeFromScratch is a competitive, profit-maximizing firm. If the market price of cupcakes increases from $2.00 to $2.50, how many workers would the firm then hire?


A) 2 workers
B) 3 workers
C) 4 workers
D) 5 workers

E) B) and D)
F) A) and B)

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Why do we say that the demand for labor is a derived demand?

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A firm's demand for labor (or ...

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Which of the following events would shift a labor supply curve? (i) Immigration of high-skilled workers (ii) Immigration of low-skilled workers (iii) Changes in the number of women willing to work full time


A) (i) and (iii) only
B) (ii) and (iii) only
C) (iii) only
D) (i) , (ii) , and (iii)

E) A) and D)
F) All of the above

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Diminishing marginal product is closely related to


A) diminishing total cost.
B) diminishing marginal cost.
C) increasing price.
D) increasing marginal cost.

E) A) and D)
F) A) and C)

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Suppose that an industrial accident at a factory destroys a significant number of high-speed blenders that bartenders use to mix frozen drinks. What will happen in the labor market for bartenders?


A) Both wages and employment will increase.
B) Both wages and employment will decrease.
C) Wages will increase, and employment will decrease.
D) Wages will decrease, and employment will increase.

E) C) and D)
F) A) and B)

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Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. Figure 18-1 On the graph, L represents the quantity of labor and Q represents the quantity of output per week. -Refer to Figure 18-1. The shape of the curve suggests the presence of A) an inverted production function. B) diminishing total product. C) increasing marginal product. D) diminishing marginal product. -Refer to Figure 18-1. The shape of the curve suggests the presence of


A) an inverted production function.
B) diminishing total product.
C) increasing marginal product.
D) diminishing marginal product.

E) B) and C)
F) A) and D)

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Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. Figure 18-4 The graph below illustrates the market for nurses who work in doctors' offices. -Refer to Figure 18-4. Each August many students entering college for the first time visit a doctor's office to have an MMR booster vaccine. If a new labor-saving technology exists that allows robots to administer the vaccine quickly and accurately, what happens in the market for nurses? A) Demand increases from D1 to D2. B) Demand decreases from D2 to D1. C) Supply increases from S1 to S2. D) Supply decreases from S2 to S1. -Refer to Figure 18-4. Each August many students entering college for the first time visit a doctor's office to have an MMR booster vaccine. If a new labor-saving technology exists that allows robots to administer the vaccine quickly and accurately, what happens in the market for nurses?


A) Demand increases from D1 to D2.
B) Demand decreases from D2 to D1.
C) Supply increases from S1 to S2.
D) Supply decreases from S2 to S1.

E) A) and C)
F) A) and B)

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Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, in the labor market for health care employees the equilibrium wage


A) increases, and the equilibrium quantity of labor increases.
B) increases, and the equilibrium quantity of labor decreases.
C) decreases, and the equilibrium quantity of labor increases.
D) decreases, and the equilibrium quantity of labor decreases.

E) A) and D)
F) C) and D)

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Figure 18-5 The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. Figure 18-5 The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. -Refer to Figure 18-5. Assume that two points on the firm's production function are (L = 2, Q = 180) and (L = 3, Q = 228) , where L = number of workers and Q = quantity of output. The firm pays its workers $120 per day. The firm's non-labor costs are fixed, and they amount to $250 per day. We can conclude that A) the firm sells its output for $12 per unit. B) if the firm is currently employing 2 workers per day, then profit could be increased by $48 per day if a third worker is hired. C) the marginal cost per unit of output is $2.50 when output is increased from 180 units per day to 228 units per day. D) the firm's maximum profit occurs when it hires 3 workers per day. -Refer to Figure 18-5. Assume that two points on the firm's production function are (L = 2, Q = 180) and (L = 3, Q = 228) , where L = number of workers and Q = quantity of output. The firm pays its workers $120 per day. The firm's non-labor costs are fixed, and they amount to $250 per day. We can conclude that


A) the firm sells its output for $12 per unit.
B) if the firm is currently employing 2 workers per day, then profit could be increased by $48 per day if a third worker is hired.
C) the marginal cost per unit of output is $2.50 when output is increased from 180 units per day to 228 units per day.
D) the firm's maximum profit occurs when it hires 3 workers per day.

E) B) and C)
F) C) and D)

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As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see


A) an increase in the marginal productivity of her remaining land and an increase in the marginal productivity of her labor.
B) an increase in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.
C) a decrease in the marginal productivity of her remaining land and an increase in the marginal productivity of her labor.
D) a decrease in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.

E) C) and D)
F) None of the above

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Figure 18-5 The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. Figure 18-5 The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. -Refer to Figure 18-5. The firm would choose to hire three workers if A) the market wage for a day's work is $220. B) the market wage for a day's work is $260. C) the output price is $220. D) the output price is $260. -Refer to Figure 18-5. The firm would choose to hire three workers if


A) the market wage for a day's work is $220.
B) the market wage for a day's work is $260.
C) the output price is $220.
D) the output price is $260.

E) All of the above
F) B) and D)

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Suppose that a large rogue wave destroys the (thankfully unoccupied) fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?


A) The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall.
B) The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall.
C) The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.
D) The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.

E) None of the above
F) All of the above

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Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers. Which of the following would happen in the labor market for this product?


A) Demand would decrease.
B) Demand would increase.
C) Supply would decrease.
D) Supply would increase.

E) A) and D)
F) B) and D)

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If the price of Verizon cell phones falls, what will happen to the demand curve for Verizon sales people?


A) It will shift to the right.
B) It will shift to the left.
C) The direction of the shift is ambiguous.
D) It will remain unchanged.

E) C) and D)
F) A) and D)

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