Econ Unit 5

Working in a slaughterhouse is much riskier and more unpleasant than working in a bookstore. As a result, we'd expect a difference in wages between the two jobs. The difference is known as

A compensating differential

The concept of derived demand is described by which of the following?

A decrease in the demand for theater tickets will decrease the demand for actresses and actors

If hiring an additional worker would increase a firm's total cost by less than it would increase its total revenue, the firm should

Hire the worker

Value of marginal product is defined as the additional

Output a firm would receive after hiring one more factor of production

If the marginal cost of a monopolist shifts up, which of the following will occur to the monopolist's price and output?

Price: Increase Output: Decrease

Compared to perfect competition, monopolistic competition

Provides greater product differentiation at the cost of some excess capacity

Other things equal, the demand for labor will be more elastic

The more substitutable labor is with other inputs

In the factor market, which of the following would happen if the workers became more productive and at the same time the price of the product fell?

The value of the marginal product of labor would be indeterminate

Bill is trying to convince the owner of a pizza shop to hire him. He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each. If the facts are not in dispute, but the owner does not hire him, then

The wage rate must be more than $40 per day

From the viewpoint of economic efficiency, a monopolist produces

Too little of a good and charges too low a price

A perfectly competitive market producer of steel rods and steel beams employs 100 workers with identical skills. If steel rods and steel beams sell for the same price, which of the following rules should the producer always follow to use the 100 workers efficiently

II only

An individual's labor supply curve is derived from that person's preferences about the trade-off between income and

Leisure

For a firm buying 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 declines?

Marginal Product

A profit-maximizing firm should hire an input as long as the

Marginal revenue product of the input is at least as much as the cost of hiring the input

The marginal productivity of the third chef is?

6 pizzas

if the price for a product produced in a competitive market increases, which of the following is most likely to occur in the labor market for workers who produce that product?

The demand for labor and the number of workers hired both increase

The Chasey Company will make a profit of:

$300

Chasey Company Inc. is the only producer in a small town. Cost and revenue information for the Chasey Company are shown above. Chasey Company would set the price of its product at

$7.50

The law of diminishing marginal returns occurs when which chef is hired?

6

The Chasey Company would maximize profits by producing a quantity of;

100

The total variable cost of producing five units of output is

30

Given the production information in the table above, how many workers would be employed if the wage rate were $20 per day and if sandwiches sold for $0.50?

4

The marginal cost of producing the fourth unit of output is

4

If the price per pizza is $10 and if each chef receives $20 an hour, how many chefs will the owner hire to maximize profits?

5

Which of the following is most likely to shift the demand for aircraft mechanics to the right?

An increase in the demand for air travel

Which of the following will inevitably cause a shift in the market demand for workers with a certain skill?

An increase in the demand for good produced by these workers

In a perfectly competitive labor market for nurses, all of the following statements are true except:

An increase in the supply of nurses will create unemployment and leave wages unchanged

The labor market shown above is initially in equilibrium. If a minimum wage level is set a Wm, employment will

Decrease from B to A

If a perfectly competitive industry is in long-run equilibrium, which of the following is most likely to be true?

Firms are earning a return on investment

The profit maximizing level of output for this firm is

Impossible to determine from the given information

The derived demand concept suggests that an increase in the demand for computers will:

Increase the demand for microchip design engineers

Which of the following correctly describes a perfectly competitive firm's short run supply curve in the product market?

Rising portion of the marginal cost curve above average variable cost

for a firm that both sells its output and buts its inputs in purely competitive markets, the labor demand curve:

Slopes downward and the labor supply curve is perfectly elastic

A change in which of the following will not cause a shift in the demand curve for a factor of production

Supply of the factor

Which of the following is not a characteristic of a monopsony?

The MRC for the firm is unsloping, but the MRP for the market is perfectly elastic

Assume that a firm is hiring labor in a perfectly competitive labor market. If the marginal revenue product is greater than the wage rate, which of the following will be true?

The firm should employ more workers

A competitive firm produces a product using labor and plastic. The firm is initially in equilibrium. If the cost of plastic suddenly increases which of the following will occur?

The firm's demand curve for plastic will shift to the left

Which of the following explains why the marginal revenue product of an input in a perfectly competitive market decreases as a firm increases the quantity of an input used?

The law of diminishing marginal return

The graph above shows the marginal revenue product curve and supply curve of labor for a firm. The introduction of new management techniques dramatically increases worker productivity. Which of the following changes is most likely to occur?

The marginal revenue product curve will shift to the right, increasing the wage rate

If the minimum wage for teen-agers increased to a rate higher than their market equilibrium wage, what would be the effect on their wage and employment?

Wage: Increase Employment: Decrease