Micro Econ Module 11

A company hires​ 4, 5,​ 6, or 7 workers who produce a daily output of 500​ units, 620​ units, 705​ units, and 765 units respectively. The marginal product of labor from hiring 4th worker is 135 units. If the price per product is​ $1.50 and the daily wage per worker is​ $100, then the optimal number of workers hired by the company to maximize its profits is

6

All of the following are true of the demand for labor​ except:

It is not affected by the retail price.

The labor demand curve will shift leftward​ when:

a​ labor-saving technology is introduced.

The value of marginal product of capital ​(VMPK​) is the

contribution that each additional unit of physical capital adds to a​ firm's revenues, all else equal.

A production function shows​

the number of workers employed and the corresponding output levels that will be produced.

A firm will employ physical capital until​

the value of marginal product of capital left parenthesis VMPK right parenthesisthe value of marginal product of capital (VMPK) equals the rental price of capital.

The substitution effect implies there is ________ relationship between the wage rate and the quantity of labor supplied. While the income effect implies there is ___________ relationship between wage rate and the quantity of labor supplied.

1. a postive 2. an inverse

The demand curve is​ downward-sloping because marginal productivity _________ as more workers are​ employed, while the supply curve is​ upward-sloping since an increase in the wage increases the opportunity cost of _________

1. falls 2. leisure

Which of the following statements is not​ correct?

At all times an increase in wage increases labor supply.

Which of the following is not an important determinant of wage inequality within an​ economy?

Differences in connections to influential people.

All of the following statements are true of a labor supply curve​ except:

It is downsloping due to the income effect.

Star Solutions Ltd is a business consultancy firm that uses custom software made by the company for each of its 3 clients and the​ off-shelf software for its remaining 3 clients. The firm has a workforce of 50 employees with similar annual salaries of which 25 employees work on the custom software and the remaining employees work on the​ off-shelf software. The firm faces similar costs for implementing the two types of software and it incurred a​ one-time similar cost for training the employees for either software. If the firm plans to expand its business and hire a larger​ workforce, which of the following strategies should it​ prefer?

The firm should only expand the workforce for the custom software and train them.

Which of the following relationships are not true in the case of a competitive firm trying to maximize its​ profit?

Wages=Marginal costs=Price. Wages=Marginal cost=VMPL.

In the United States in​ 2011, there were 104 fatalities per​ 100,000 workers in the logging industry. This is the​ second-highest rate after the fisheries industry. Although the fatality rate in this industry is so​ high, many workers still choose to work as loggers. What could explain​ this?

Workers choose these​ high-risk jobs because they are willing to bear an occupational risk to earn a higher wage.

When the VMPL is plotted in a diagram with the number of workers measured along the horizontal​ axis, the resulting curve​ (connecting the plotted​ points) is the​ firm's

demand for labor

For​ Hewlett-Packard (HP), the demand for software engineers is _________ from the production of HP laptops

derived

When the​ firm's VMPL is plotted in a diagram with the quantity of labor measured along the horizontal​ axis, the resulting curve will be ____________ and constitutes the​ firm's ___________.

downward sloping demand curve for labor

All of the following are reasons for compensating wage differentials​ except:

educational levels.

The value of marginal product of labor​ (VMPL) is​

given by the marginal product of labor times the price of the​ firm's output. the contribution of an additional worker to a​ firm's revenues.

When it comes to determining the appropriate quantity of physical capital to​ use, the firm employs a decision rule that is conceptually __________ the approach it takes in choosing the number of workers to hire.

identical to

An argument in favor of employers paying for the job training of an employee​ is:

job training can improve a​ worker's job-specific skill set.

The demand curve slopes downward because _________ productivity falls as more workers are employed

marginal

John will continue to consume leisure up to the point at which

the marginal benefit of leisure is equal to the marginal cost.

According to the​ graph, the consequence of the change in immigration is a ________ market wage and a _________ level of employment.

1. higher 2. lower

According to the​ graph, the consequence of the change in technology is a __________ market wage and a _______ level of employment.

1. lower 2. lower

VMPK equals​

MPK×P.

The increase in wage inequality over the past five decades is best explained​ by:

​skill-biased technological change.

Two major theories for why employers might discriminate are​ ____________.

​taste-based discrimination and statistical discrimination.

Sam and Jacob are two friends who graduated from high school as part of the class of 2015. Now one year​ later, Sam works as a cashier at a hardware store and Jacob works at a glass manufacturing factory with more dangerous conditions. ​Therefore, we can conclude that Sam would earn _________ Jacob because of the ___________

1. less than 2. compensating wage differentials

A​ profit-maximizing firm will hire workers until the ________ equals the __________. To hire beyond that would mean the firm would be paying the worker ________ than the​ worker's contribution to the firm.

1. value of the marginal product of labor (VMPL) 2. wage 3. more

Because this firm is competitive and has no control over its​ product's price, the declining values for VMPL are a result of diminishing

marginal productivity

In this​ case, the​ school's administrators will seek to hire _______ economics instructors.

more

Compensating wages are the wage premiums​ ___________.

paid to attract workers to occupations to otherwise undesirable jobs.

The supply curve slopes upward since the opportunity cost of leisure __________ following an increase in the wage.

rises

Human capital is the​ __________.

skills and knowledge that people obtain by furthering their schooling. experience that people derive from spending more time on a job.

Suppose an employer avoids hiring youthful workers because she worries that their skill level makes them unproductive In this​ case, the employer is practicing _________ discrimination

statistical

If an​ employer's discrimination signals that he is trying to enhance profits profits​, then he is engaging in ______ discrimination

taste-based

Derived demand is the demand a firm has for​

the factors of production that enable it to produce output that is sold in product markets.

If the value of the marginal product of labor is equal to the​ wage, then:

the marginal cost is less than or equal to the wage.

In​ equilibrium, an optimal mix of production factors is achieved​ when:

the marginal product from the last dollar spent on each input is equalized.

The fast food restaurant on Main Street just laid off several​ workers, replacing them with​ self-order computer kiosks. This would​ imply:

the marginal product of capital per dollar spent on capital was greater than the marginal product of labor per dollar spent on labor.

According to the Law of Diminishing​ Returns,

the marginal productivity of an additional unit of labor eventually decreases as the quantity of labor increases.