Chapter 5 Econ

A contractor is employing labor and capital to build an office complex. I think current mix of inputs, the marginal product of labor is 30 ft.² per day, and the marginal product of capital is 90 feet per day. The price of labor is $1000 per day, and the price of capital is $3000 per day. To hire inputs in a cost minimizing way, the firm should

Make no changes to the mix of inputs

Profit maximizing firm will continue to hire workers until the marginal revenue product of labor is equal to

Marginal factor cost

For a firm hiring 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, which of the following to declines?

Marginal product

A profit maximizing firm should hire in and put up to the point at which

Marginal revenue product equals marginal factor cost

Assume labor and capital are substitute inputs. A manufacturer will employee more labor if

Price of capital increases

Assume a perfectly competitive labor market. Which of the following correctly describes the individual demand curve for labor in the market demand curve for labor?

Down word sloping for firm, and downward slope in for market

The last worker currently employed by a firm has a marginal product of three units per hour and is paid $20 per hour. Assuming that both the labor market and product market are perfectly competitive and that the product price is five dollars per unit, the firm should do which of the following?

Employ fewer workers

Assume that a profit maximizing, perfectly competitive firm hires labor in a perfectly competitive labor market. If the market wage is $12 per hour and the price of the product is three dollars per unit the firm will

Hire another worker if the output per hour of the additional worker exceeds four units

Assume that a firm uses labor and capital to produce a product. The firm hires labor at a wage rate of four dollars per unit and rents capital at five dollars per unit. At its current output level, the marginal physical product of labor and capital are 20 and 30 units, respectively. To minimize its cost of production without changing the level of output, the firm should

Hire less labor and rent more capital

Pose that the firm begins to hire workers for a newly completed plant with a fixed amount of machinery. As the firm hires additional workers one would expect the marginal product to

Rise initially but eventually fall

Motivated by lower import prices, United States manufacturers increase their imports of steel from other steel producing countries. Which of the following best describes the impact of the increase steel imports on the labor market for steel workers in the United States?

The demand for United States steel workers will decline putting downward pressure on steel worker wages

Firm XYZ produces and sells corn in a perfectly competitive market and hires its workers in a perfectly competitive labor market. Which of the following best describes the demand curve for XYZ is corn and XYZ is demand curve for labor?

The man is horizontal and labor demand is downward sloping

If a firm employees only labor and capital in its production process, which of the following best describes the optimal combination of inputs for the firm in the long run

The marginal product per dollar spent on labor is equal to the marginal product per dollar spent on capital

If a large number of unskilled workers enter the labor market, which of the following is most likely to occur in labor market for unskilled workers?

The supply curve will shift to the right and the wage rate will decrease