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ECON 1116 Lecture 10: Mankiw Factors of Production

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orangemallard165
30 Nov 2016
School
Northeastern University
Department
Economics
Course
ECON 1116
Professor
Pritchard Robert

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Document Summary

Cartels are inherently unstable because there is incentive to cheat. Demand for oil is a function of a demand for something else. Factors of production are the inputs used to produce goods and services. The demand for a factor of production is. Figure 1 the versatility of supply and demand (a) the market for apples (b) the market for apple pickers. Table 1 how the competitive firm decides how. A firm"s demand for a factor of production is derived from its decision to supply a good in another market. Labor markets, like other markets in the economy, are governed by the forces of supply and demand. Most labor services, rather than being final goods ready to be enjoyed by consumers, are inputs into the production of other goods. The production function illustrates the relationship between the quantity of inputs used and the quantity of output of a good. The marginal product of labor is the increase.

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Related Questions

MC Qu. 020 In a market economy:

In a market economy:

the government owns the means of production so that it can produce what is in society's best interest.

businesses design their plans to maximize their profit and the market is relied upon to see that individual self-interest is consistent with society's interest.

workers are directed by government planning boards to produce what is in society's best interest.

government sets prices to make necessities affordable because it is in society's best interest to make necessities affordable.

MC Qu. 022 Suppose that at the current price consumers would ...

Suppose that at the current price consumers would like to purchase 10 million large-screen televisions and 15 million are available. When the market coordinates the demand and supply for large-screen televisions, the price of large-screen televisions will:

rise.

fall.

stay the same.

be fixed by the government.

MC Qu. 036 Most economies today are:

Most economies today are:

pure market economies.

differentiated primarily by the degree to which they depend on markets.

differentiated primarily by who owns the means of production.

socialist.

MC Qu. 047 Households are on the:

Households are on the:

the supply side of factor markets and the demand side of goods markets.

the demand side of factor markets and the supply side of goods markets.

the supply side of both factor markets and goods markets.

the demand side of both factor markets and goods markets.

MC Qu. 050 Governments do all of the following except:

Governments do all of the following except:

oversee the interaction of households and businesses in the goods and factor markets.

demand labor services from households in the factor market.

demand for goods and services from businesses in the goods market.

supply labor services to businesses in the factor market.

MC Qu. 054 Businesses fail because:

Businesses fail because:

they follow the principle of consumer sovereignty too closely.

the invisible hand determines that they are not producing something socially valuable.

they earn excessive profits.

entrepreneurship is present.

MC Qu. 066 A business is most likely to be characterized as a...

A business is most likely to be characterized as a corporation if:

it has two or more owners, with each owner liable for every other owner's actions.

it has only one owner.

it is legally treated as a person and owned by stockholders who are liable for the actions of the corporate "person" regardless of their investment

each owner is liable only to the extent of his or her own investment.

MC Qu. 074 Which of the following statements is correct?

Which of the following statements is correct?

Stockholders are legally liable for all the debt of a corporation.

A corporation is a business that is legally owned by its employees.

Corporations are legal entities that, in law, are treated as persons.

Most large companies and many small companies in the United States are not corporations.

MC Qu. 095 Government regulation of working conditions is an ...

Government regulation of working conditions is an example of:

government as a referee.

government as owner.

government as an actor.

government as a dictator.

10. MC Qu. 104 Which of the following would most likely generate ...

Which of the following would most likely generate a negative externality?

education

a lighthouse

cigarette smoke

employment

1. In a market economy, the high salaries of some star baseball players such as Adrian Gonzalez, are determined by

   

Team owners, based on the total number of star athletes they plan to hire.
  B

advertising companies, based on what they are willing to pay to advertise their products at baseball games.
  C

the interaction of the demand for star athletes and the supply of star athletes.
  D

consumers, based on their willingness to watch baseball games.

2. Demand in factor markets differs from demand in product markets in that

  A

the demand for a factor of production is difficult to determine.

B

  

the demand for a factor of production is influenced by workers' productivity and by the producers' expected sales revenues, not by tastes and preferences of consumers.

C

  

demand for a factor of production is based on the tastes and preferences of firms.

D

  

demand for a factor of production is based on the tastes and preferences of resource owners.
     

3. The demand for labor is described as a derived demand because

A

  

it is derived by workers seeking to earn income to fund the consumption of goods and services.

B

  

it is derived by producers seeking to make profits by starting new businesses.

C

  

it is derived from the demand for products that use labor in the production process.

D

  

it is derived from government institutions that rely on labor markets for the purpose of raising tax revenue.

4. Which of the following is not an example of a derived demand?

A

  

Several of the animated films released between 1999 and 2001 failed to earn a profit, which caused some companies to stop making these films, thereby decreasing the demand for animators.

B

  

Seth Bullock, a personal injury attorney, complains that he is earning far less now than a few years ago largely because personal injury cases have been undercut by state laws limiting class-action suits and payouts on damages.

C

  

Millicent Manning, the owner of a furniture store, is concerned that her sales have fallen for the past six months. She attributes this to the downturn in the real estate market.

D

  

As advancements in medical technology increase the safety and success of laser eye surgery, the demand for opticians has decreased.

5. Marginal revenue product for a perfectly competitive seller is equal to

A

  

the output price multiplied by the total product of labor.

B

  

the output price multiplied by the number of workers hired.

C

  

the change in total revenue that results from hiring another worker.

D

  

the marginal cost of production.

6. What is the difference between labor's marginal product and marginal revenue product?

A

  

The marginal product of labor is the increase in output as a result of hiring an additional worker while the marginal revenue product of labor is the increase in profit as a result of hiring an additional worker.

B

  

The marginal revenue product of labor is the dollar value of hiring an additional worker while the marginal product of labor is the increase in the firm's physical output as a result of hiring an additional worker.

C

  

The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue.

D

  

Labor's marginal product is a measure of labor's productivity while labor's marginal revenue product is a measure of labor's ability to sell the firm's products.

7. What is the difference between a firm's marginal revenue and its marginal revenue product?

A

  

Marginal revenue is the change in sales revenue from selling one more unit of output while marginal revenue product is the profit earned from hiring one more worker.

B

  

Marginal revenue is the change in sales revenue from selling one more unit of output while marginal revenue product is the change in total revenue from hiring one more worker.

C

  

Marginal revenue is the increase in revenue when a firm raises its output price while marginal revenue product is the increase in the marginal product when a firm hires an additional worker.

D

  

There is no difference between the two terms.

1. Suppose that a 10% increase in the wage results in a 5% reduction in employment. In this case, labor demand is said to be:

A. elastic

B. inelastic

C. unit elastic

2. Which of the following best explains why elasticity varies along a linear demand curve?

A. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) while the percentage change in wage increases.

B. As the quantity of labor demanded rises, the percentage change in quantity demanded rises (for a given change in labor use) as does the percentage change in the wage.

C. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) as does the percentage change in the wage.

D. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) while the percentage change in wage decreases

3. Labor demand is more elastic when:

A. the substitution effect resulting from a wage change is larger

B. the scale effect resulting from a wage change is larger

C. both are correct

D. none of the above

4. The scale effect associated with a change in the wage is larger when:

A. the demand for the final product is more elastic

B. labor costs are a smaller share of total costs

C. there are many close substitutes for this category of labor

D. economics of scale are present in the production of the good

5. The price elasticity of demand for the final products affects the own-wage elasticity of demand for labor by affecting the magnitude of:

A. the substitution effect that occurs in the labor market

B. the scale effect that occurs in the labor market

C. both substitution and scale effects

D. neither substitution nor scale effects

6. Unions are expected to attempt to:

A. make it more difficult to replace labor with other resources

B. reduce the elasticity of demand for the final product

C. support laws that reduce the elasticity of supply of other resources

D. all of the above.

E. none of the above

7. Unions are likely to be less successful in negotiating higher wages in those labor markets in which:

A. the demand for the final product is more elastic

B. there are few close substitutes for union workers

C. the price elasticity of supply for other factors of production is relatively high

D. labor costs comprise a small share of total costs