Econ Test 4
Which of the following will lead to a decrease in the firm's short run demand for labor?
A decline in labor productivity
Which of the following statements is true?
A firm can increase quantity demanded for labor when the wage rate falls without affecting the product price but the industry cannot hire more workers without causing the product price to fall
Which of the following will cause a shift in the demand curve of labor?
All of them (an increase/decrease in the productivity of labor, an increase/decrease in the demand for the product labor produces, a decline in the price of a complementary input)
Which of the following would cause the labor demand curve to shift to the right?
An increase in labor productivity
Suppose the market for autoworkers is initially equilibrium, but then the automakers purchase capital goods that are a substitute for workers. What happens in the market for autoworkers?
The equilibrium wage rate and the equilibrium quantity of labor will both decrease
Suppose the market for autoworkers is initially in equilibrium, but then the automakers purchase capital goods
The equilibrium wage rate and the equilibrium quantity of labor will both decrease
When MFC=MRP, a firm in a competitive market will
stop hiring
A firm will not hire additional workers once
the additional cost of a worker equals the additional revenue from the worker
A firm's marginal factor cost describes
the change in total cost that results from using one more unit of an input
The demand curve for labor will shift whenever
the demand for the final product changes
Which will NOT affect the elasticity of demand for labor?
the elasticity of supply for labor
The equilibrium wage rate in an industry is found by
the intersection of the market demand curve for labor and the market supply curve of labor
If a firm employs an extra unit of labor, the additional product generated by employing the extra unit of labor is
the marginal physical product of labor
We would expect unions to have a more difficult time negotiating higher wages for their members when
the product produced has several close substitutes
If the marginal productivity of labor decreases, then
the quantity of labor demanded at every possible wage rate will be less
The price elasticity of demand for a variable input will be more elastic in all the following cases EXCEPT
the shorter the time period being considered
The demand for DVD's increases. As a result,
the wage rate in the DVD industry increases and the quantity supplied of workers increases
The The marginal revenue product represents
the worker's contribution to the firm's total revenues
We would expect that a fall in labor supply will have a proportionately smaller effect on the market wage rate when
workers can easily be replaced by capital goods
An industry's equilibrium wage rate is established
by the intersection of the industry supply and demand curves for labor
We assume that when a firm hires additional workers, the marginal physical product of labor will
decrease because each worker now has less capital and other resources to work with
The demand for labor is
derived from the demand for the final product being produced
In a perfectly competitive labor market, the industry demand curve is _______ and the industry supply curve is ______
downward sloping; upward sloping
The price elasticity of demand for labor will be greater, the
easier it is to employ substitute inputs in production
As the wage rate rises, other things constant, perfectly competitive firms will employ
fewer workers
The price elasticity of demand for labor will be greater, the
greater is the price elasticity of demand for the final product
If the price of labor increases, the typical perfectly competitive firm in the short run will
hire less labor
In a perfectly competitive labor market, the labor supply curve facing the firm will be
horizontal
The supply of labor to the individual firm in a perfectly competitive market is
perfectly elastic at the current market clearing wage rate
The price elasticity of demand for labor will depend upon all but the
price elasticity of supply for the final product
When the price of a product decreases, the marginal revenue product curve in a perfectly competitive market
shifts to the left
The price elasticity of demand for labor will be smaller, the
smaller is the price elasticity of demand for the final product
The price elasticity of demand for labor will be smaller, the
smaller is the proportion of wage costs in the total cost of production
If a firm is a perfectly competitive purchaser of factor inputs and the wage rate is $5, the marginal factor cost for labor is
$5
Which of the following statements about a perfectly competitive market are true? I. The perfectly competitive industry faces an upward sloping labor supply curve II. The individual firm in a perfectly competitive industry faces a perfectly elastic labor supply curve
Both I and II
What has been the impact of the widespread adoption of automated teller machines (ATMs) on the demand for bank tellers?
The demand for bank tellers has become more elastic
Which of the following would cause the price elasticity of demand for a variable input to be greater?
The longer the time period being considered
The price elasticity of demand for labor equals
The percentage change in the quantity demanded of labor divided by the percentage change in the price of labor
An increase in demand for DVD machines occurs. Which of the following statements is true for individual firms that produce DVD machines?
The price of DVD machines will increase leading to an increase in the demand for labor by the firm
Suppose the market for pizza makers initially in equilibrium, but then the equilibrium wage rate increased and the equilibrium quantity of labor will decrease. What happened in the market for pizza makers?
The supply for pizza makers decreased
In a perfectly competitive industry, an individual firm faces
a perfectly elastic labor supply curve
When MFC>MRP, a firm in a competitive market will
layoff workers
A short run increase in the price of a firm's output will typically
lead to more employment in the competitive firm
The elasticity of demand for labor will be less the
less the demand elasticity for the final product
An increase in the supply of labor generates
lower wages
The additional cost associated with the hiring of one more unit of labor is known as the
marginal factor cost of labor
For a perfectly competitive firm, the value of the marginal product of labor falls as more workers are hired because of the diminishing
marginal physical product of labor
The contribution to total revenues coming from the next worker hired is
marginal revenue product
The additional revenue earned from hiring one more worker is known as the
marginal revenue product of labor
