Theory of MNE - PART 2

All of the following firms are producing on the same output isoquant. Which firm will use the most labor?

Wage 120$; Hourly price of capital 240$

In the short run

a firm can not add on to an assembly line or introduce new machines to the production process

If the salaries of accountants increase and other conditions remain the same, then

a firm will move to the left along its labor demand curve for accountants

A competitive industry hires 1000 workers. The 1000th worker adds $500 a week to their employer's revenue. If a monopoly took over the industry, then the 1000th worker would likely

add less than 500$ a week to their employer's revenue

Which of the following events will cause the labor demand curve to shift up and to the right?

an increase in product demand

Empirical estimates of the short-run employment affects of minimum wage increases

are very low, partly because it takes a long time for employers to adjust fully to changes in the minimum wage

If a tax is placed on an employer

both wages and employment levels will usually decrease

If the absolute elasticity of labor demand is 2.0, then an eight percent increase in the wage will

decrease employment by 16%

When wages increase, the substitution effect implies that employment will ________ and the scale effect implies that employment will ________

decrease; decrease

Number of Total # of Pots Workers Produced per day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 Referring to Table 3.1, if wages are $50.00 per day and pots sell for $20.00 each, how many potters will the firm hire?

four

If every worker wants ten dollars per hour to work, then wages will

go up by less than 10$

Other things equal, an elastic demand for an industry's output will tend to make the industry's own wage elasticity of demand

high

An employer who is a monopolist in the product market will probably

hire fewer employees than a perfect competitor would

A competitive firm uses two inputs: capital and labor. At its current level of hiring of both inputs, capital's marginal product is 12 while labor's marginal product is 18. Capital's cost (C) is $8 per unit while labor's cost (W) is $9. In the long run, to produce the same output at a lower cost, the firm should

hire more labor and less capital

If the labor market is competitive and coverage is complete, then legislation to enact a minimum wage above the equilibrium wage level would

increase wages and decrease employment

The introduction of new forms of capital generally

increases the own-wage elasticity of labor demand

Employment often increases after an increase in the minimum wage because

independently, labor demand increases significantly at the same time

Declining marginal product of labor

is needed if competitive firms are to stop hiring workers at some point

If labor costs twice as much as capital (per unit), then, in the long run,

labor's marginal product will be twice that of capital's

Long-term unemployment rates are higher in most Western European countries than in the United States because

nonmarket forces keep wages in Western Europe above the equilibrium level

Other things equal, the own-wage elasticity of demand for a category of labor is higher when

other factors of production can be easily substituted for the category of labor

A profit-maximizing firm decides to produce 100 units of output. This implies that the firm will

produce at a point where its isoexpenditure line is tangent to the isoquant curve for 100 units of output

If skilled workers are gross complements with low-skilled immigrant labor, then when there is an increase in low-skilled immigrant labor

skilled workers wages will go up and their employment will go up

The marginal product of labor tells us

the additional output produced by the last employee hired

Economic rent is

the amount by which a worker's wage exceeds his or her reservation wage

When a firm moves to a higher isoquant,

the firm now produces more output

If the hourly wage is $50 and the price of output is $25 then in the short run

the firm should add workers if they add 2 or more units to output

Because workers choose between various employers offering the same type of job based primarily on wages

the firm supply curve for chefs is horizontal

Output is produced with capital and labor. If the price of capital goes up

the firm will more labor per unit output

Because workers have varying preferences about the type of work they like to do,

the market supply curve for chefs is upward sloping

When deciding the salary of a sports star,

the team must consider how much the sports star will cause revenues to increase

If employers are paid a subsidy of $0.75 per hour for hiring teenage workers, then

the teenagers' wage rate will usually increase by less than $0.75 per hour

In the long run a profit-maximizing firm will select capital and labor so that

the wage divided by the marginal product of labor equals the rental cost of a unit of capital divided by the marginal product of capital

If more people enter the labor market for architects, then

the wage rate will decrease and the employment level will increase

For two substitutes in production, if the scale effect dominates

then the inputs are gross complements

If two inputs are complements in production

then the inputs are gross complements

If teenagers and adults are substitutes in production, and the wage of teenagers falls, then

they could be either gross substitutes or gross complements and the employment of adults could rise or fall

Number of Total # of Pots Workers Produced per day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 Referring to Table 3.1, diminishing marginal returns begins with the ________ employee

third

Empirical estimates of cross -wage elasticities show that

well-educated labor is more likely to be complementary with capital than is unskilled labor

Most of a payroll tax is eventually paid by

workers if the supply of labor curve is very inelastic

Which are pays the highest real wage?

A) Nominal Wage $20; Consumer Price Index for Area $100 B) Nominal Wage $50; Consumer Price Index for Area $200 C) Nominal Wage $25; Consumer Price Index for Area $150 D) Nominal Wage $15; Consumer Price Index for Area $50 --> D

Which of the following occurs if a firm pays workers more than the market wage?

All of above occur

If a firm hires another unit of labor, output goes up by 12 units. The wage rate for the unit of labor is $6. What is the firm's cost of producing another unit of output using labor?

0.50$

If the own-wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by

10%

When a competitive firm hired nine workers, its profits were $100. When it hired 10 workers, its output was went from 9 to 11 units. Each unit of output sold for $10 while the wage of each worker was $12. What is the firm's new profit level?

108$

Workers in the Widget Industry YEAR EARNING CPI 1966 8,000$ 60 1976 15,000$ 100 1986 22,500$ 178 1996 30,000$ 205 According to Table 2.2, in which year were the real earnings of workers in the Widget Industry highest?

1976

Population: 260 million Employed: 130 million Unemployed: 10 million Retired: 35 million Under Age 16: 60 million Given the data in Table 2.1, the unemployment rate is

7.1%

It has been said that teaching assistants to professors are underpaid. Which of the following would be evidence (if true) that they are underpaid?

Professors have a hard time finding qualified teaching assistants

Which of the following events could explain why wages and employment could fall in a competitive labor market?

The demand curve shifts left and down

If Industry A can substitute capital for labor easily and Industry B can not, then (other things equal)

Industry A's own-wage elasticity of demand will be higher than Industry B's