ECON chapter 16
The demand for labor and other factors of production typically decline in a recession because those factors
Are derived from the demand for final output, which also declines in a recession.
The marginal revenue product of labor curve is the firm's
Demand curve for labor.
If consumers decide to buy fewer strawberries, then the
Demand for strawberry pickers will fall.
If we move to the right along the upward-sloping labor supply curve, we observe that the cost of labor
Increases due to the increasing opportunity cost.
Workers typically require higher wages in order to work additional hours because of the
Increasing opportunity cost of labor.
A firm should hire an additional worker as long as the wage rate is
Less than the MRP.
When the MPP of labor is zero, ceteris paribus,
No further increases in output can be achieved by using additional units of labor.
If the number of available workers of a particular type increases, which of the following shifts should occur in the labor market for the particular type of labor?
Supply of labor should shift to the right.
If the MPP of an additional unit of labor is 3 units per hour, product price is constant at $8 per unit, and the wage rate is $26 per hour, then
The additional unit of labor should not be employed because it costs more than it is worth.
If a chair can be sold for $20 and it takes a worker two hours to make a chair, the marginal revenue product of this worker is
$10 per hour.
Other things being equal, which of the following would increase the market demand for labor?
An increase in the marginal productivity of labor.
Campbell loves to work. He does not receive any enjoyment from leisure time. The last dollar that he earns each year means just as much to him as the first dollar. Which of the following best describes the shape of Campbell's labor supply curve?
Horizontal.
As more hours are worked, the marginal utility of leisure time tends to
Increase
Students who major in computer science are paid a lot more when they graduate than those who major in philosophy because
Information technology is a growth industry.
The number of hours that a worker is willing to work is determined by the trade-off between the increasing
Marginal utility of leisure and the decreasing marginal utility of income.
Because of the law of diminishing returns, as additional workers are hired, total output
Rises at a diminishing rate initially and eventually falls.
The marginal physical product of labor is equal to
The change in total output divided by the change in quantity of labor.
The marginal revenue product of labor is equal to
The marginal physical product multiplied by the marginal revenue of the output.
A competitive firm should continue to hire workers until the MRP is equal to
The market wage rate.
A production process is defined as
The mix of resources used to produce output.
For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with
The wage rate.
The opportunity cost of working is the
Value of leisure time that must be given up.
When there are more qualified applicants than job openings, this indicates that the
Wages being offered are too high.
As an individual earns additional income, the marginal utility of income tends to
decrease
When people are standing in line for jobs and there are more applicants than jobs, then the labor market is characterized by a
surplus of labor
If the price of the output produced by a particular type of labor decreases, which of the following shifts should occur in the labor market for the particular type of labor?
Demand for labor should shift to the left.
As labor productivity increases, which of the following shifts in the labor market should occur?
Demand for labor should shift to the right.
If the number of employers for a particular type of labor increases, which of the following shifts should occur in the labor market for the particular type of labor?
Demand for labor should shift to the right.
The value of an hour of leisure can best be estimated as
The hourly wage that could have been earned.
If the demand for alarm clocks decreases, the effect on the alarm clock job market will be to
Decrease the demand for labor and reduce equilibrium wages.