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The Markets for the Factors of Production 4539
152. Refer to Table 18-9. Suppose this firm charges a price of $5 per unit of output and pays
workers a wage equal to $160 per day. How many workers should this firm hire to maximize its
profit?
a. 2 workers
b. 3 workers
c. 4 workers
d. 5 workers
Table 18-10
Quantity of Labor
Number of Baseballs Per
Day
0
0
1
100
2
240
3
360
4
440
5
500
153. Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $5 in a competitive
market. For which level of employment is the marginal product of labor greatest?
a. 1 worker
b. 2 workers
c. 3 workers
d. 4 workers
4540 The Markets for the Factors of Production
154. Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $5 in a competitive
market. What is the total revenue per day that the firm will earn if it employs five workers?
a. $500
b. $300
c. $2,200
d. $2,500
155. Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $5 in a competitive
market. What is the marginal revenue product of the third worker?
a. 120 baseballs.
b. $300
c. $400
d. $600
The Markets for the Factors of Production 4541
156. Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $2.50 in a competitive
market. What is the marginal revenue product of the fourth worker?
a. $200
b. $300
c. $400
d. $500
157. Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $5 in a competitive
market and the firm pays each unit of labor a wage equal to $320 per day. How many units of
labor should the firm hire to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
4542 The Markets for the Factors of Production
158. Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $2.50 in a competitive
market and the firm pays each unit of labor a wage equal to $225 per day. How many units of
labor should the firm hire to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
Table 18-11
Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells
cupcakes for $2 each and pays the workers a wage of $325 per day.
Labor
(number of
workers)
Quantity
(cupcakes
per day)
Marginal
Product of
Labor
(cupcakes
per day)
Value of the
Marginal
Product of
Labor
Wage (per
day)
Marginal
Profit
0
0
$325
1
200
$325
2
380
$325
3
540
$325
4
680
$325
5
800
$325
6
900
$325
The Markets for the Factors of Production 4543
159. Refer to Table 18-11. What is the third worker's marginal product of labor?
a. 120 cupcakes
b. 140 cupcakes
c. 160 cupcakes
d. 180 cupcakes
160. Refer to Table 18-11. What is the fourth worker's marginal product of labor?
a. 120 cupcakes
b. 140 cupcakes
c. 160 cupcakes
d. 180 cupcakes
4544 The Markets for the Factors of Production
161. Refer to Table 18-11. What is the fifth worker's marginal product of labor?
a. 120 cupcakes
b. 140 cupcakes
c. 160 cupcakes
d. 180 cupcakes
162. Refer to Table 18-11. What is the sixth worker's marginal product of labor?
a. 100 cupcakes
b. 120 cupcakes
c. 140 cupcakes
d. 160 cupcakes
The Markets for the Factors of Production 4545
163. Refer to Table 18-11. What is the value of the marginal product of the first worker?
a. $200
b. $400
c. $500
d. $700
164. Refer to Table 18-11. What is the value of the marginal product of the second worker?
a. $180
b. $360
c. $450
d. $720
4546 The Markets for the Factors of Production
165. Refer to Table 18-11. What is the value of the marginal product of the fifth worker?
a. $120
b. $240
c. $300
d. $1,600
166. Refer to Table 18-11. The marginal product of labor begins to diminish with the addition of
which worker?
a. the 1st worker
b. the 2nd worker
c. the 3rd worker
d. the 4th worker
The Markets for the Factors of Production 4547
167. Refer to Table 18-11. What is the marginal profit of the fourth worker?
a. $280
b. $25
c. –$5
d. –$45
168. Refer to Table 18-11. What is the marginal profit of the sixth worker?
a. $100
b. −$50
c. −$75
d. −$125
4548 The Markets for the Factors of Production
169. Refer to Table 18-11. Assuming MadeFromScratch is a competitive, profit-maximizing firm,
how many workers will the firm hire?
a. 2 workers
b. 3 workers
c. 4 workers
d. 5 workers
170. 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
The Markets for the Factors of Production 4549
171. Refer to Table 18-11. Suppose that there is a technological advance that allows
MadeFromScratch employees to
produce more cupcakes than they could before. Because of this change, the firm’s
a. demand for labor shifts right.
b. demand for labor shifts left.
c. supply of labor shifts right.
d. supply of labor shifts left.
172. Refer to Table 18-11. Suppose that the firm suffers a loss of some of their technology such as
the theft of their industrial mixers. After the theft, MadeFromScratch employees produce fewer
cupcakes than they could before because they must mix the cupcake batter by hand rather than
using the high-speed mixers. Because of this change, the firm’s
a. demand for labor shifts right.
b. demand for labor shifts left.
c. supply of labor shifts right.
d. supply of labor shifts left.
4550 The Markets for the Factors of Production
Table 18-12
The table displays data for a small, competitive, profit-maximizing firm that produces and sells
envelopes. The time frame is one week.
Labor
L
Marginal Product of Labor
MPL
Wage
W
0 workers
134 boxes of envelopes
$600
1
106
$600
2
92
$600
3
84
$600
4
78
$600
5
173. Refer to Table 18-12. Let Q represent the number of boxes of envelopes produced per week.
One point on this firm’s production function is
a. (L = 1, Q = 106).
b. (L = 2, Q = 92).
c. (L = 2, Q = 106).
d. (L = 2, Q = 240).
The Markets for the Factors of Production 4551
174. Refer to Table 18-12. Let Q represent the number of boxes of envelopes produced per week.
Which of the following points is not a point on this firm’s production function?
a. (L = 2, Q = 240).
b. (L = 3, Q = 332).
c. (L = 4, Q = 408).
d. (L = 5, Q = 494).
175. Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $6.
What is the value of the marginal product of the second worker?
a. $1,440
b. $1,212
c. $636
d. $552
4552 The Markets for the Factors of Production
176. Refer to Table 18-12. If the value of the marginal product of the first worker hired is $938,
then how many workers does the firm employ?
a. 2
b. 3
c. 4
d. 5
177. Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $6.
What is the marginal profit of the fourth worker?
a. $-132
b. $-96
c. $132
d. $504
The Markets for the Factors of Production 4553
178. Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $7.50.
How many workers should the firm hire?
a. 2
b. 3
c. 4
d. 5
179. Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $7.
Suppose also that the firm’s fixed costs amount to $400. How many workers should the firm hire
in order to maximize profit, and what is the maximum profit?
a. The firm should hire 2 workers; its maximum profit is $80.
b. The firm should hire 2 workers; its maximum profit is $96.
c. The firm should hire 3 workers; its maximum profit is $96.
d. The firm should hire 3 workers; its maximum profit is $124.
4554 The Markets for the Factors of Production
180. Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for $6.
The firm would not be interested in hiring a third worker unless the wage fell from its current
level of $600 to what level?
a. $564
b. $557
c. $554
d. $551
Figure 18-4
The graph below illustrates the market for nurses who work in doctors’ offices.
The Markets for the Factors of Production 4555
181. Refer to Figure 18-4. Each August many high school and college students visit a doctor’s
office to have a sports physical. If the price of sports physicals falls, 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.
182. Refer to Figure 18-4. Each August many high school and college students visit a doctor’s
office to have a sports physical. If the price of sports physicals rises, 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.
4556 The Markets for the Factors of Production
183. Refer to Figure 18-4. If doctors’ offices adopt new labor-saving technologies, 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.
184. Refer to Figure 18-4. If doctors’ offices adopt new labor-augmenting technologies, 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.
The Markets for the Factors of Production 4557
185. Refer to Figure 18-4. If the supply of medical supplies that nurses use when performing sports
physicals increases, 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.
186. Refer to Figure 18-4. If the supply of medical supplies that nurses use when performing sports
physicals decreases, 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.
4558 The Markets for the Factors of Production
Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon
off the coast of Alaska. As part of her business she hires a captain and several crew members
for each boat. In the market for fresh Pacific salmon, there are thousands of firms like
Gertrude's. While Gertrude usually catches a significant number of fish each year, her
contribution to the entire harvest of salmon is negligible relative to the size of the market.
187. Refer to Scenario 18-2. Based on the given information, it is likely that Gertrude's firm has
a. some influence over the wages paid to crew members but no influence over the price of
salmon.
b. some influence over the price of salmon but no influence over the wages paid to crew
members.
c. some influence over both the price of salmon and the wages paid to crew members.
d. no influence over either the price of salmon or the wages paid to crew members.
188. Refer to Scenario 18-2. When Gertrude participates in the labor market to hire crew members
for her boats, she is most likely considered a
a. demander of labor services.
b. supplier of labor services.
c. demander of capital.
d. supplier of capital.
