Production Factors For Economics(Economics ) Questions and Answers

Question 1. An increase in the price of automobiles shifts the demand for autoworkers to the ?
  1.    left and decreases the wage
  2.    right and decreases the wage
  3.    right and increases the wage
  4.    left and increases the wage
Explanation:-
Answer: Option C. -> right and increases the wage
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 2. A competitive profit-maximizing firm should hire workers up to the point where ?
  1.    the wage, the rental price of capital and the rental price of land are all equal
  2.    the marginal product of labor equals zero and the production function is maximized
  3.    the value of the marginal product of labor equals the wage
  4.    the marginal product of labor equals the wage
Explanation:-
Answer: Option C. -> the value of the marginal product of labor equals the wage
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 3. 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 ?
  1.    Wages rise, and rental rates fall
  2.    Wages rise, and rental rates rise
  3.    Wages fall, and rental rates rise
  4.    Wages fall, and rental rates fall
Explanation:-
Answer: Option A. -> Wages rise, and rental rates fall
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 4. A decrease in the supply of farm tractors will cause all but which of the following ?
  1.    an increase in the rental rate for tractor
  2.    a decrease in the rental rate of farmland
  3.    a decrease in the value of the marginal product of tractors
  4.    an increase in the wage of farm workers
Explanation:-
Answer: Option D. -> an increase in the wage of farm workers
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 5. An individual firm’s demand for a factor of production ?
  1.    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 red
  2.    Slopes downward due to the factor’s diminishing marginal product
  3.    slopes upward due to the factor’s increasing marginal product
  4.    is perfectly elastic (horizontal) if the factor market is perfectly competitive
Explanation:-
Answer: Option B. -> Slopes downward due to the factor’s diminishing marginal product
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 6. What will a decrease in the supply of fishermen do to the market for capital employed in the fishing industry ?
  1.    increase the demand for fishing boats and decrease rental rates on fishing boats
  2.    decreases the demand for fishing boats and increase rental rates on fishing boats.
  3.    decreases the value of the marginal product of fishermen, reduces their wage, and increases employment in the fishing industry
  4.    increase the demand for fishing boats and increase rental rates on fishing boats
Explanation:-
Answer: Option C. -> decreases the value of the marginal product of fishermen, reduces their wage, and increases employment in the fishing industry
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 7. If a factor exhibits diminishing marginal product, hiring additional units of the factor will ?
  1.    cause a reduction is output
  2.    have no effect on output
  3.    increase the marginal product of the factor
  4.    generate ever smaller amounts of output
Explanation:-
Answer: Option D. -> generate ever smaller amounts of output
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 8. 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 ?
  1.    interest
  2.    dividends
  3.    increases in stocks of goods
  4.    retained earnings
Explanation:-
Answer: Option C. -> increases in stocks of goods
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 9. Which of the following is not true with regard to workers who have a high value of marginal product? These workers ?
  1.    have skills that are in relatively scarce supply
  2.    produce output for which there is great demand
  3.    usually have little capital with which to work
  4.    are usually highly paid
Explanation:-
Answer: Option C. -> usually have little capital with which to work
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 10. For a competitive profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm’s ?
  1.    supply curve of capital
  2.    demand curve for capital
  3.    production function
  4.    marginal cost curve
Explanation:-
Answer: Option B. -> demand curve for capital
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
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