Pennsylvania State University - ECON 102 Quiz 06. All Correct answers Reviewed and indicated. 100% Score.

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ECON 102 Quiz 06 . Question 1 1 / 1 pts Select the answer below that corresponds to the idea of a derived demand curve. A bagel producer hires more workers because she would like to reduce... the number of hours she personally works at the bagel factory A bagel producer invests in a new bagel oven to take advantage of a new investment tax deduction Correct! A bagel producer decides to supply more bagels to the market, and as a result her demand for bagel workers increases All of the above selections are consistent with the idea of a derived demand The demand for bagel workers is derived from the decision to supply bagels to the market. Question 2 0 / 1 pts A profit maximizing firm that has labor as the only variable factor of production has a demand curve that is You Answered equal to the marginal product of labor equal to the marginal revenue product of labor equal to the average product of labor equal to the marginal cost of production The labor demand curve is the same as the marginal revenue product of labor for a profit maximizing firm in a competitive market. Question 3 0 / 1 pts Consider the graph above. A profit maximizing firm will hire a quantity of labor that maximizes total revenue You Answered is less than La is greater than La is equal to La The profit maximizing firm hires labor up to the point where the wage is equal to the MRP of labor. Question 4 1 / 1 pts Consider the table above. How much does the 4th worker contribute to the firm’s revenue? $18 $40 $50 Correct! $30 The fourth worker contributes $3*10= $30 to the firm’s total revenue. Question 5 1 / 1 pts Consider the table above. What is the marginal product of the 5th worker? Correct! 2 3 5 20 The marginal product of labor is calculated as the change in output divided by the change in labor. Question 6 1 / 1 pts When each additional worker hired contributes less than the previous worker hired to total output, we can say there are (is) falling average productivity diminishing marginal utility diminishing average returns Correct! diminishing marginal returns As more and more of a variable input is added to a fixed input, the additional output produced by the variable input will eventually decline. Question 7 1 / 1 pts The labor supply curve would shift to the right if more parents take time off to take care of children Correct! more workers immigrated to the area it becomes mandatory that all citizens complete high school none of the above would shift the labor supply curve Labor supply increases as immigration increases. Question 8 0 / 1 pts A bakery firm owns a large factory in San Francisco. An earthquake destroys 25% of the bakery’s capital equipment. The marginal productivity of the undamaged capital equipment will increase be unchanged You Answered decrease none of the above Due to the property of diminishing marginal returns, when the capital stock is reduced, the marginal product of the remaining capital should be higher. Question 9 0 / 1 pts When a firm is hiring capital, labor and land for its production process, the cost minimization condition is PL = PK=PA MPL = MPK = MPA MPL/PL = MPK/PK=MPA/PA You Answered all of the above are equivalent The profit maximization condition for a firm using multiple inputs is MPL/PL = MPK/PK = MPA/PA. Question 10 1 / 1 pts Your bagel shop uses both capital and labor in the production of bagels. In this production process capital and labor are substitutes. If you install a new oven and the marginal product of capital increases, you will Correct! reduce the number of workers you employ increase the number of workers you employ reduce the amount of capital you are using not make any changes since you are already maximizing profit Since K and L are substitutes you will employ more capital and less labor. [Show More]

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