Which of the following is a factor of production?
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B. Land. Land is a factor of production because it is a resource used to produce goods and services. Money, profit and tax are not factors of production.
What is the demand for factors of production derived from?
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A. The demand for the goods and services they produce. The demand for factors of production is derived from the demand for the goods and services that they help to produce.
Which of the following is an example of a labour-intensive production process?
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B. A restaurant using chefs to cook food. Labour-intensive production relies more on human labour than on technology or machinery.
Which of the following is an example of a capital-intensive production process?
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B. A bakery using ovens to bake bread. Capital-intensive production relies more on technology and machinery than on human labour.
What is the main difference between labour-intensive and capital-intensive production?
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B. The amount of labour used relative to capital. Labour-intensive production uses more labour relative to capital, while capital-intensive production uses more capital relative to labour.
Which of the following is a measure of productivity?
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B. The amount of output per worker. Productivity is a measure of the amount of output produced per unit of input, such as per worker.
What is the formula for calculating labour productivity?
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B. Total output divided by number of workers. Labour productivity is calculated as the total output produced divided by the number of workers employed.
Which of the following would increase labour productivity?
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C. Investing in better technology. Investing in better technology can increase labour productivity by enabling workers to produce more output in the same amount of time.
What is the law of diminishing returns?
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B. As more workers are employed, output will eventually increase at a decreasing rate. The law of diminishing returns states that as more of a variable factor of production, such as labour, is employed, the additional output produced will eventually increase at a decreasing rate.
Which of the following is an example of a fixed factor of production?
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A. Land. A fixed factor of production is one that cannot be varied in the short run, such as land. Labour, capital and entrepreneurship can be varied in the short run.
Which of the following is an example of a variable factor of production?
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B. Labour. A variable factor of production is one that can be varied in the short run, such as labour. Land, a factory building and a patent are fixed factors of production.
What is the relationship between the demand for labour and the marginal revenue product of labour?
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A. The demand for labour is equal to the marginal revenue product of labour. The demand for labour is determined by the marginal revenue product of labour, which is the additional revenue produced by an additional worker.
Which of the following would shift the demand curve for labour to the right?
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B. An increase in the price of the good or service produced. An increase in the price of the good or service produced will increase the marginal revenue product of labour, shifting the demand curve for labour to the right.
Which of the following would shift the supply curve for labour to the left?
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D. A decrease in the retirement age. A decrease in the retirement age would reduce the supply of labour, shifting the supply curve for labour to the left.
What is the equilibrium wage rate determined by?
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A. The intersection of the demand and supply curves for labour. The equilibrium wage rate is determined by the intersection of the demand and supply curves for labour, where the quantity of labour demanded equals the quantity of labour supplied.