The factors of production are best defined as the

• output produced from raw materials.

• inputs used to produce goods and services.

• wages paid to the workforce.

• goods and services sold in the market.

Capital, labor, and land

• have derived demands.

• are factors of production.

• are inputs used in the production of goods and services.

• All of the above are correct.

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a

• marginal product of demand.

• secondary demand.

• derived demand.

• compensatory demand.

The basic tools of supply and demand apply to

• both markets for goods and services and markets for labor services.

• markets for goods and services but not to markets for labor services.

• markets for goods and services but not to markets for factors of production.

• all markets except those in which demand is derived demand.

The marginal product of labor is the

• marginal revenue product minus the wage paid to the worker.

• total amount of output divided by the total units of labor.

• increase in the amount of output from an additional unit of labor.

• None of the above is correct.

Typically, as a firm hires additional workers, the marginal product of labor

• decreases, and the value of the marginal product of labor decreases.

• stays constant, and the value of the marginal product of labor decreases.

• decreases, and the value of the marginal product of labor stays constant.

• decreases, and the value of the marginal product of labor increases.

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of RM20 each. If the facts are not in dispute, but the owner does not hire her, then

• the wage rate must be less than RM60 per day.

• hiring Juanita would involve a negative marginal product.

• the wage rate must be more than RM60 per day.

• the wage rate must be less than RM20 per day.

Consider the market for capital equipment. Suppose the market price of firms’ output decreases. Holding all else constant, the equilibrium quantity of capital equipment will

• increase.

• decrease.

• not change.

• It is not possible to determine what will happen to the equilibrium quantity of capital equipment.

The owners of capital resources are compensated according to the

• purchase price of the capital stock.

• marginal product of capital.

• value of the marginal product of capital.

• absolute level of production of final goods and services.

Owners of land are compensated according to the

• absolute level of production from the land.

• number of laborers the land can support.

• purchase price of the land stock.

• value of the marginal product of land.