Econ Test 4 Chapter 28 SG

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In labor markets, the substitution effect occurs when

A change in the price of a substitute input causes the demand for labor to change in the same direction

Which of the following will not lead to a change in the demand for labor?

A change in the supply of labor

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

In a perfectly competitive industry, an individual firm faces

A perfectly elastic labor supply curve

A fall in the price of the final product produced by a firm will cause

A reduction in demand for an input used to produce the final product

A firm purchases more capital equipment. We would expect to observe

An increase in the demand for labor by this firm

Which of the following will lead to an outward shift in the firm's short-run demand for labor?

An increase in the price of output

Which of the following will cause a shift in the demand curve of labor?

An increase or decrease in the productivity of labor. An increase or decrease in the demand for the product labor produces. A decline in the price of a complementary input . Correct - All of these

Suppose the market for autoworkers is initially in 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 suppose the automakers improve working conditions at the plants. What happens in the market for autoworkers?

The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase

Holding other things constant, an increase in the use of capital in production would

Increase the marginal productivity of labor

Coal is required to make steel. Hence, the price elasticity of demand for coal by steel manufacturers will be

Inelastic

The demand for an input will be more inelastic when

It is difficult to substitute other inputs for this input

A firm's marginal revenue product of labor curve is also

Its labor demand 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

An increase in the supply of labor generates

Lower wages

The contribution to total revenues coming from the next worker hired is

Marginal Revenue Product

The additional cost associated with the hiring of one more unit of labor is known as the

Marginal factor cost of labor

The change in total output due to the change in one variable input, while holding all other inputs constant, is the

Marginal physical product

Marginal revenue product is

Marginal physical product multiplied by marginal revenue

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 supply of labor to the individual firm in a perfectly competitive market is

Perfectly elastic at the current market clearing wage rate

The greater the elasticity of demand for a final product, we find ________ the demand for the factor inputs.

the greater will be

All of the following make the demand for labor more elastic EXCEPT

the smaller the proportion of total costs accounted for by labor

Suppose the market for autoworkers is initially in equilibrium, but then the demand for automobiles increases and simultaneously the automakers allow autoworkers workers less flexibility working at the plants. What happens in the market for autoworkers?

The equilibrium wage rate will increase and the equilibrium quantity of labor will increase, decrease or stay the same

The greater the elasticity of demand for a final product, we find ________ the demand for the factor inputs

The greater will be

Which of the following would NOT shift an industry's supply of labor curve?

The wage rate in the particular industry falls

The demand for computers increases. As a result,

The wage rate increases in the industry and the quantity supplied of workers increases

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

The supply of labor to an industry will decrease when

Workers receive better employment opportunities in other industries

An industry utilizes capital and two types of labor. Unskilled labor is a substitute for capital while the skilled labor is complementary to capital. An increase in the price of capital will

cause the wage of unskilled labor to rise relative to the price of skilled labor

In a perfectly competitive labor market, the labor supply curve facing the firm will be

horizontal

The price elasticity of demand for labor will depend upon all but the

price elasticity of supply for the final product

An industry's equilibrium wage rate is established

By the intersection of the industry supply and demand curves for labor

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

The individual firm operating in a perfectly competitive labor market

Can buy all the labor it wants at the going market wage rate

The marginal physical product of labor is the

Change in output generated by a unit change in 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

All of the following affect the demand elasticity for labor EXCEPT

Final product income elasticity

The wage rate found by the intersection of the market demand and supply curves for labor then determines the

Firm's supply curve for labor

If the price of labor increases, the typical perfectly competitive firm in the short run will

Hire less labor

When MFC < MRP, a firm in a competitive market will

Hire more workers

The labor supply curve faced by an individual firm in a perfectly competitive market is

Horizontal

When the price of a product increases, the marginal revenue product curve in a perfectly competitive market

Shift to the right

When the marginal productivity of labor decreases, the demand curve for labor in a perfectly competitive market

Shifts to the left

When the price of a product decreases, the marginal revenue product curve in a perfectly competitive market

Shifts to the left

The market demand curve for labor

Slopes downward

The price elasticity of demand for labor will be smaller, the

Smaller is the price elasticity of demand for the final product

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

As more workers are hired, the marginal physical product of labor eventually declines because

The amount of capital each worker has to work with declines as the number of workers increases

A firm's marginal factor cost describes

The change in total cost that results from using one more unit of an input

The marginal revenue product is

The change in total revenue resulting from a one-unit change in variable input

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.

Suppose the market for pizza makers is initially in equilibrium, but then the equilibrium wage rate and the equilibrium quantity of labor both increased. What happened in the market for pizza makers?

The demand for pizza makers increased

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 demand for DVD's increases. As a result,

The wage rate in the DVD industry increases and the quantity supplied of workers increases

The equilibrium wage rate in an industry is determined by

The intersection of the market demand curve for labor and the market supply curve 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

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

When market wages increase in a perfectly competitive market, then

The marginal factor cost increases

A profit-maximizing firm in a competitive market will continue to hire more workers when

The marginal factor cost is less than the marginal revenue product of the additional workers

The marginal revenue product of labor is

The marginal physical product multiplied by marginal revenue

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

Which of the following statements is true about the market demand curve for labor?

The market demand curve depends upon labor productivity, the wage rate and the price of the final product

Which of the following statements is true about the market and individual firm's supply curve for labor?

The market supply curve is more inelastic than the firm's supply curve

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

We would expect unions to have a more difficult time negotiating higher wages for their members when

The product produced has several close substitutes

Suppose there are 1000 firms in a market and all are identical. Firm A will hire 20 workers when the wage rate is $10, 25 workers when the wage rate is $9, and 30 workers when the wage rate is $8. The equilibrium wage rate for a number of years has been $9. If the wage rate falls to $8, we know that

The quantity demanded for the market will increase to less than 30,000 workers

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

Suppose the market for pizza makers is initially in equilibrium, but then the equilibrium wage rate increased and the equilibrium quantity of labor will decreased. What happened in the market for pizza makers?

The supply for pizza makers decreased

When there is an increase in the wages the banking industry offers accountants, what happens to the supply of accountants available to other industries?

The supply to other industries falls

The elasticity of demand for labor will be less the

less the demand elasticity for the final product

The additional revenue earned from hiring one more worker is known as the

marginal revenue product of labor


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