unit 4 multiple choice review

if an increase in the amount of capital employed by a firm leads to an increase in the marginal product of labor, labor and capital are considered

complements

a firm will continue to employ more land until its value of the MP of land is

equal to rental rate

compare to a perfectly competitive market, in a monopsonistic market

fewer workers will be hired

an increase in the wage rate will

cause an upward movement along the labor supply curve

economic rent is

income earned above a factor's opportunity cost, by any factor owner

the derived demand concept suggests that an increase in the demand for computers will

increase the demand for microchip design engineers

a labor union is introduced in a perfectly competitive labor market causes

higher earnings

the higher the interest rate, the

higher the opportunity cost of current consumption

if the MP of labor per dollar is greater than the MP of capital per dollar, the firm should

hire more labor

in a perfectly competitive market, marginal resource cost faced by any one firm

is fixed, because any one firm is too small to influence the price of the factor

which factor of production receives the largest portion of the income in the US

labor

a profit maximizing firm will hire

labor until its wage rate equals its marginal revenue product

the increase in output created by the addition of one more unit of input is called

marginal physical product

for a firm buying labor in a perfectly competitive labor market, the marginal revenue product curve slopes downward after some point because as more of a factor is employed, what declines?

marginal product

the increase in total revenue from the addition of one more unit of input is called

marginal revenue product

in the factor market, what would be the most certain result of an increase in worker productivity and an increase in the price of the product at the same time

marginal revenue product of labor would increase

to maximize profits, a firm should

set MRP=MRC regardless of its market setting

choosing the combination of inputs that maximizes profits means

setting the marginal revenue products equal to the marginal resource cost for each factor

for a firm that sells its output and buys its inputs in a purely competitive markets, the labor demand curve

slopes downward and the labor supply curve is perfectly elastic

an automobile factory employs either assembly line workers or robotic arms to produce. in this case, labor and capital are considered

substitutes

in a monopsonistic labor market

the MRC of labor is above the market wage

the demand curve for labor is derived from

the demand curve for the output produced by labor

in derived factor demand, the word derived refers to the idea that the factor demand is derived from

the demand for the final good or service the factor is used to produce

the demand for lemon candies is fairly elastic, since there are many substitutes for lemon candy, therefore

the derived demand for lemons is likely to be elastic

if the demand for lemon candy decreased

the derived demand for lemons would decrease

the demand curve for a factor is

the factor's MRP curve

what describes why the MRP of an input in a perfectly competitive market decreased as a firm increased quantity of input used

the law of diminishing marginal returns

other things equal, the demand for labor will be more elastic

the more substitute labor is with other inputs

in the factor market, what would happen if the workers became more productive and at the same time, the price of the product fell?

the value of the marginal product of labor would be indeterminante

a monopsonistic labor market is one in which

there is only one buyer of labor

most americans receive most of their income in the form of

wages and salaries

what could shift the supply curve for labor to the right

an increase in labor market opportunities for women

what will increase the demand for labor?

an increase in labor productivity

a competitive labor market is currently in equilibrium. which of the following increases market wage?

demand for the good produced by this labor is stronger

the demand for labor is

derived from the demand for the products produced by labor

if hiring more workers leads to each new worker producing less than the previous worker, this is called

diminishing marginal product