The Markets for the Factors of Production 4499
69. Suppose that a competitive firm hires labor up to the point at which the value of the marginal
product equals the wage and that labor is the only input that varies for the firm. If the firm pays a
wage of $700 per week and the marginal product of labor equals 35 units per week, then the
marginal cost of producing an additional unit of output is
a. $20.
b. $35.
c. $700.
d. We do not have enough information to answer this question.
70. Suppose that a competitive firm hires labor up to the point at which the value of the marginal
product equals the wage and that labor is the only input that varies for the firm. If the firm pays a
wage of $700 per week and the marginal product of labor equals 10 units per week, then the
marginal cost of producing an additional unit of output is
a. $7.
b. $70.
c. $700.
d. We do not have enough information to answer this question.
4500 The Markets for the Factors of Production
71. When labor is the only input a firm uses, the marginal cost of a unit of output can be defined as
the
a. marginal revenue multiplied by the wage.
b. marginal product of labor multiplied by the wage.
c. marginal product of labor divided by the wage.
d. None of the above is correct.
72. For maximum profit, a firm hires labor up to the point at which the wage equals
(i) the value of the marginal product of labor.
(ii) the marginal cost of an additional unit of output.
(iii) output price multiplied by the marginal product of labor.
a. (i) and (ii) only
b. (i) and (iii) only
c. (ii) and (iii) only
d. (i), (ii), and (iii)
The Markets for the Factors of Production 4501
73. As a result of increasing its workforce from 9 workers to 10 workers, a firm’s total revenue per
day increases from $60,000 to $60,250 and its total cost per day increases from $58,500 to
$58,700. The marginal profit of the 10th worker is
a. –$50.
b. $50.
c. $200.
d. $250.
74. When a competitive firm produces output up to the point at which the price is equal to marginal
cost, it also hires labor up to the point at which the wage is equal to the
a. marginal cost of labor.
b. marginal profit of labor.
c. marginal product of labor.
d. value of the marginal product of labor.
4502 The Markets for the Factors of Production
75. For a competitive firm, which of the following quantities is equal to marginal cost?
a.
wage marginal product of labor
b.
wage value of marginal product of labor
c.
price marginal product of labor
d.
price value of marginal product of labor
Figure 18–1
On the graph, L represents the quantity of labor and Q represents the quantity of output per week.
The Markets for the Factors of Production 4503
76. Refer to Figure 18-1. The figure illustrates the
a. demand for labor.
b. supply of labor.
c. production function.
d. wage function.
77. Refer to Figure 18-1. The marginal product of the second worker is
a. 90 units of output.
b. 105 units of output.
c. 210 units of output.
d. 330 units of output.
78. Refer to Figure 18-1. The marginal product of the fourth worker is
a. 60 units of output.
b. 75 units of output.
c. 285 units of output.
d. 345 units of output.
4504 The Markets for the Factors of Production
79. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $600 per week, and each
unit of output sells for $9. What is the value of the marginal product of the third worker?
a. $540
b. $600
c. $675
d. $810
80. Refer to Figure 18-1. Suppose the firm sells its output for $12 per unit, and it pays each of its
workers $700 per week. The value of the marginal product of the fifth worker is
a. $540
b. $700
c. $720
d. $1,080
The Markets for the Factors of Production 4505
81. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $700 per week, and each
unit of output sells for $9. How many workers will the firm hire to maximize its profit?
a. 2
b. 3
c. 4
d. 5
82. Refer to Figure 18-1. Suppose the firm sells its output for $12 per unit, and it pays each of its
workers $700 per week. How many workers will the firm hire to maximize its profit?
a. 2
b. 3
c. 4
d. 5
4506 The Markets for the Factors of Production
83. Refer to Figure 18-1. Suppose the firm sells its output for $15 per unit, and it pays each of its
workers $750 per week. When output increases from 210 units to 285 units, the
a. marginal cost is $10 per unit of output.
b. marginal revenue is $5 per unit of output.
c. value of the marginal product of labor is $4,275
d. firm’s profit decreases.
84. Refer to Figure 18-1. Suppose the firm sells its output for $10 per unit, and it pays each of its
workers $400 per week. When the number of workers increases from 4 to 5, the
a. marginal revenue is $450 per unit of output, and the marginal cost is $400 per unit of output.
b. value of the marginal product of labor is $3,900, and the marginal cost per unit of output is
$400.
c. value of the marginal product of labor is $450, and the marginal cost per unit of output is about
$8.89.
d. firm’s profit increases.
The Markets for the Factors of Production 4507
85. Refer to Figure 18-1. Suppose the firm sells its output for $25 per unit, and it pays each of its
workers $1,000 per week. Also, the firm’s non-labor costs are fixed and they amount to $2,000.
The firm maximizes profit by hiring
a. 2 workers.
b. 3 workers.
c. 4 workers.
d. 5 workers.
86. Refer to Figure 18-1. Suppose the firm sells its output for $20 per unit, and it pays each of its
workers $1,250 per week. The firm maximizes profit by hiring
a. 3 workers.
b. 4 workers.
c. 5 workers.
d. 6 workers.
4508 The Markets for the Factors of Production
87. 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.
The Markets for the Factors of Production 4509
88. Refer to Figure 18-1. Based on the shape of the curve, the
(i) total product is increasing.
(ii) total product is decreasing.
(iii) marginal product is increasing.
(iv) marginal product is decreasing.
a. (i) only
b. (i) and (iii) only
c. (i) and (iv) only
d. (ii) and (iv) only
Figure 18–2
The figure below shows the production function for a particular firm.
4510 The Markets for the Factors of Production
89. Refer to Figure 18-2. The marginal product of the third worker is
a. 20 units.
b. 30 units.
c. 40 units.
d. 70 units.
90. Refer to Figure 18-2. The marginal product of the fourth worker is
a. 100 units.
b. 25 units.
c. 20 units.
d. 10 units.
91. Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its
output at $10 per unit. What is the value of the marginal product of labor for the third worker?
a. 20 units
b. $200
c. $2,720
d. $3,200
The Markets for the Factors of Production 4511
92. Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its
output at $10 per unit. What is the value of the marginal product of labor for the fourth worker?
a. 10 units
b. $100
c. $1,000
d. $1,600
93. Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its
output at $10 per unit. How many units of labor should the firm hire to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
4512 The Markets for the Factors of Production
94. Refer to Figure 18-2. Suppose the firm pays a wage equal to $320 per unit of labor and sells its
output at $15 per unit. How many units of labor should the firm hire to maximize profit?
a. 2 units
b. 3 units
c. 4 units
d. 5 units
Figure 18–3
95. Refer to Figure 18-3. What is the marginal product of the second worker?
a. 4 units
b. 6 units
c. 8 units
d. 12 units
The Markets for the Factors of Production 4513
96. Refer to Figure 18-3. What is the marginal product of the third worker?
a. 2 units
b. 4 units
c. 4.67 units
d. 14 units
97. Refer to Figure 18-3. What is the marginal product of the fourth worker?
a. 1 unit
b. 2 units
c. 3.75 units
d. 15 units
98. Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the
marginal product of the second worker?
a. $4
b. $5
c. $80
d. $240
4514 The Markets for the Factors of Production
99. Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the
marginal product of the third worker?
a. $2
b. $10
c. $40
d. $280
100. Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the
marginal product of the fourth worker?
a. $1
b. $20
c. $280
d. $300
The Markets for the Factors of Production 4515
Scenario 18-1
Harry owns a snow-removal business. He hires workers to shovel driveways for him during the
winter. The first worker he hires can shovel twelve driveways in one day. When Harry hires two
workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker,
he shovels an additional eight driveways in one day.
101. Refer to Scenario 18-1. What is the marginal productivity of the second worker?
a. 7
b. 10
c. 12
d. 22
102. Refer to Scenario 18-1. What is the total productivity of three workers?
a. 12
b. 22
c. 30
d. 42
4516 The Markets for the Factors of Production
103. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he
charges each customer $20 to have his driveway shoveled. What is the value of the marginal
product of labor for the second worker?
a. $200
b. $240
c. $800
d. $960
104. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he
charges each customer $20 to have his driveway shoveled. What is the value of the marginal
product of labor for the third worker?
a. $160
b. $640
c. $1,600
d. $2,400
Table 18-1
Days of Labor
Units of Output
0
0
1
10
2
18
3
25
4
30
5
33
6
34
The Markets for the Factors of Production 4517
105. Refer to Table 18-1. What is the marginal product of the second worker?
a. 8
b. 9
c. 10
d. 18
106. Refer to Table 18-1. What is the marginal product of the third worker?
a. 7
b. 8
c. 25
d. 75
107. Refer to Table 18-1. What is the marginal product of the fourth worker?
a. 5
b. 7.5
c. 8
d. 30
4518 The Markets for the Factors of Production
108. Refer to Table 18-1. Suppose that the firm pays its workers $45 per day. Each unit of output
sells for $10. How many days of labor should the firm hire?
a. 1
b. 2
c. 3
d. 4
109. Refer to Table 18-1. Suppose that the firm pays its workers $80 per day. Each unit of output
sells for $15. How many days of labor should the firm hire?
a. 3
b. 4
c. 5
d. 6