production factors Mcqs
1. A competitive profit-maximizing firm should hire workers up to the point where ?
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A. the marginal product of labor equals the wage

B. the wage, the rental price of capital and the rental price of land are all equal

C. the marginal product of labor equals zero and the production function is maximized

D. the value of the marginal product of labor equals the wage
2. What will a decrease in the supply of fishermen do to the market for capital employed in the fishing industry ?
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A. decreases the demand for fishing boats and increase rental rates on fishing boats.

B. increase the demand for fishing boats and decrease rental rates on fishing boats

C. decreases the value of the marginal product of fishermen, reduces their wage, and increases employment in the fishing industry

D. increase the demand for fishing boats and increase rental rates on fishing boats

3. If a factor exhibits diminishing marginal product, hiring additional units of the factor will ?
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A. increase the marginal product of the factor

B. cause a reduction is output

C. generate ever smaller amounts of output

D. have no effect on output

4. An individual firms demand for a factor of production ?
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A. is perfectly elastic (horizontal) if the factor market is perfectly competitive

B. Slopes downward because an increase in the production of output reduces the price at which the output can be sold in a competitive market, thereby reducing the value of the marginal producing the value of the marginal product as more of the factor is use

C. Slopes downward due to the factors diminishing marginal product

D. slopes upward due to the factors increasing marginal product

5. A decrease in the supply of farm tractors will cause all but which of the following ?
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A. an increase in the rental rate for tractor

B. a decrease in the rental rate of farmland

C. a decrease in the value of the marginal product of tractors

D. an increase in the wage of farm workers
6. An increase in the demand for apples will cause all but which of the following ?
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A. an increase in the price of apples

B. an increase in the wage of apple pickers

C. an increase in the value of the marginal product of apple pickers

D. a decrease in the number of apple pickers employed
7. For a competitive profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firms ?
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A. supply curve of capital

B. production function

C. demand curve for capital

D. marginal cost curve

8. An increase in the price of automobiles shifts the demand for autoworkers to the ?
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A. left and increases the wage

B. right and decreases the wage

C. right and increases the wage

D. left and decreases the wage

9. An increase in the demand for a firms output ?
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A. decrease the prosperity of the firm but increases the prosperity of the factors hired by the firm

B. decreases the prosperity of both the firms and the factors hired by the firm.

C. increases the prosperity of both the firm and the factors hired by the firm.

D. increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm.

10. The most important factors of production are ?
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A. labor, land, and capital

B. management finance and marketing

C. water, earth and knowledge

D. money, stocks and bonds.

11. Which of the following is not true with regard to workers who have a high value of marginal product? These workers ?
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A. have skills that are in relatively scarce supply

B. are usually highly paid

C. usually have little capital with which to work

D. produce output for which there is great demand

12. When capital is owned by the firm as opposed to being directly owned by household capital income may take any of the following forms except ?
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A. retained earnings

B. dividends

C. interest

D. increases in stocks of goods
13. Suppose that a war is fought will biological weapons. The weapons destroy people but not capital. What is likely to happen to equilibrium wages and rental rates after the war when compared to their values before the war ?
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A. Wages rise, and rental rates fall

B. Wages fall, and rental rates fall

C. Wages fall, and rental rates rise

D. Wages rise, and rental rates rise

14. A decrease in the demand or fish ?
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A. increase the value of the marginal product of fishermen increase their wage and decreases employment in the fishing industry

B. decrease the value of the marginal product of fishermen reduces their wage, and reduces employment in the fishing industry

C. decrease the value of the marginal product of fishermen, reduces their wage, and increases employment in the fishing industry

D. increase the value of the marginal product of fishermen increase their wage, and increase employment in the fishing industry.

15. The value of the marginal product of labor is ?
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A. the price of the output times the marginal product of labor

B. the wage of labor times the marginal product of labor

C. the price of the output times wage of labor

D. none of these answers

E. the wage of labor times the quantity of labor

16. If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns ?
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A. the value of its marginal product

B. an amount equal to the price of output times total output

C. the amount allocated by the political process

D. an equal share of output