ECON 102: Chapter 11 (UNR)
If the value of the marginal product of a worker is $40 and the marginal product of the worker is 8 units, the market price of the good he produces is ________.
$5
homework (4&8)
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What is the marginal product of labor when the second worker is hired? (# of workers) (Output) (MPL) 1 15 - 2 27 -
12
How does the market for inputs like labor differ from the market for goods and services?
>The demand for inputs is derived from the demand for final goods and services. >Firms are sellers in the market for goods and services, while individuals are sellers in the market for inputs. >Firms are buyers in the market for inputs, while individuals are buyers in the market for goods and services.
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.
How do labor-saving technologies differ from labor-complementary technologies?
>Labor-saving technologies substitute for existing labor inputs, while labor-complementary technologies augment existing labor inputs. >Labor-saving technologies result in lower wages and less employment, while labor-complementary technologies result in higher wages and more employment. >Labor-saving technologies decrease the marginal product of labor, while labor-complementary technologies increase the marginal product of labor.
Which of the following is likely to lead to a leftward shift in the demand curve for labor in the petroleum extraction industry?
An increase in the price of cars
How does the labor-leisure trade-off determine the supply of labor?
An increase in the wage rate is an increase in the opportunity cost of leisure, and can therefore be expected to reduce the amount of leisure one wishes to consume. Choosing less leisure is equivalent to supplying more labor, thus yielding a positive relationship between the wage rate and the amount of labor supplied.
The market implications of taste-based discrimination were in part developed by ________.
Gary Becker
The profit-maximizing rule for a competitive firm is to hire labor until ________.
Value of marginal product of labor = Wage
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.
The labor demand curve will shift leftward when:
a labor-saving technology is introduced.
The value of the marginal product of labor is the ________.
contribution of an additional unit of labor to a firm's revenue
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
A person's stock of skills to produce economic value is referred to as ________.
human capital
If there is a decrease in the price of the final good that an industry produces, the labor demand curve for the industry is likely to ________.
shift to the left
In a competitive labor market, the profit-maximizing number of workers that a firm will hire occurs where the ____________.
value of marginal product of labor is equal to the market wage.
Who are the suppliers of labor?
workers
We can show that a profit-maximizing firm will hire the number of workers such that the wage is equal to the value of the marginal product of labor. But, as the text showed in an earlier chapter, a profit-maximizing firm will produce the quantity of output such that price equals marginal cost. Are these two rules inconsistent?
No, the decision rule regarding the optimum employment level yields the level of employment exactly necessary to produce the output level where price = marginal cost.
Which of the following factors best explains why wage inequality in the United States has been increasing over the last several decades?
Skill-biased technological change.
factors that can cause wage inequality among workers producing the same good
The market price of the final good being produced by the workers
A friend tells you that he thinks that the salespeople who work at Apple stores are paid very low wages, given their productivity. Dividing Apple's revenues by the total number of employees shows that each employee contributed an average of $473,000 in revenues in 2011. But most of Apple's sales staff are paid about $25,000 a year. What is the flaw, if any, in your friend's reasoning?
The wage is equal to the value of the worker's marginal product, not revenue per worker.
welding and painting robots on auto assembly lines is (labor- saving/complimentary tech)
labor- saving tech
labor measuring tools for construction workers is (labor- saving/complimentary tech)
labor-complimentary tech
The condition determining the optimal amount of leisure is that the ________.
marginal benefit of leisure should equal the wage rate
Statistical discrimination
occurs when expectations cause people to discriminate against a certain group.
Taste-based discrimination
occurs when people's preferences cause them to discriminate against a certain group.
Labor demand is described as a derived demand because ________.
perfectly competitive firms determine how much output to produce and then determine how much labor to hire
The owner of a company that manufactures automobile parts states that it will not hire youthful employees. This is an example of
statistical discrimination
Discrimination that occurs when people's preferences cause them to discriminate against a certain group is referred to as ________.
taste-based discrimination
When is the relationship between output and labor consistent with the Law of Diminishing Returns?
the marginal product declines as successive units of labor are hired.
