Econ Test 4 Chapter 28 SG
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
