Unit 5: Factor Markets

the marginal revenue product is equal to the wage rate

to maximize profits a firm will employ workers up to the point at which for the last worker employed

multiplying the price of the output by the marginal product of labor

when labor is hired in a competitive market, the marginal revenue product of labor is computed by

the value of stocks and bonds owned by the college

which of the following is not a factor of production at a college

Increase in the price of a good the factor produces

A factor demand curve will shift to the right because of an

monopsony

A single buyer in a factor market is called a

$50

Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. What is the marginal revenue product for the fourth worker

more productive when used together rather than when they are used separately

Eric is a college professor who uses a laptop computer to write exam questions on the side. For Eric, he and his laptop computer are

demand; negative

For a perfectly competitive employer the marginal revenue product curve is the firm's labor ___ curve. This means the marginal product curve has a ____ slope

$40

If the product price is $2 per unit, the marginal revenue product for the fifth unit of labor is

$150

In the table, if the price of a bushel of wheat is $10, then the marginal revenue product of the third worker is

4

Marci is a monopsony employer of bakers. The table shows how many hours of labor will be supplied at a variety of wages. If the marginal revenue product of labor is a constant $7, how many hours will Marci employ

Do nothing; he is hiring the optimal quantity of labor and capital

Max employs both labor and capital to produce his trinkets. Currently the last unit of labor employed has a marginal product of 100 units. The last unit of capital employed has a marginal product of 40 units. The price of labor is $25 and the price of capital is $10 per unit. Max should

Each worker would be paid $15

Oscar's Wilderness Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market. The workers and their MRPs are Alfred-$40, Barbara-$35, Calvin-$27, and Diana-$15. Which of the following statements is true

the quantity demanded of labor decrease but the demand for labor curve does not shift

Phil's Photo Studio pays its workers $60 per day and it sells photos for $10 per print. Now the market wage rate rises to $70. What happens to Phil's labor demand

since the marginal revenue product would be less than the wage, the firm would lay off some workers

Suppose all perfectly competitive fast-food firms are hiring the profit-maximizing quantity of labor and are paying their workers $7 per hour. Then suppose the government decides to raise the minimum wage to $8 an hour. Then

35

Suppose you achieve your dream of opening your own art studio, specializing in selling mud statues. You pay $10 in fixed costs for equipment, and you pay $9 per day to each of your workers who make the mud statues. You know the mud statues industry is perfectly competitive, which a current market price of $1. The table shows your production function. How many statues should you produce?

derived from the demand for the outputs that are produced by the factors of production

The demand for factors of production is called a derived demand because of it is

hire more workers and reduce the number of computers rented because the marginal product per dollar spent is higher for workers

The wage rate per hour and the last worker hired by the firm increased by 100 units. Computers rent for $50 per hour and the last computer rented by the firm increased output by 200 units. If the firm is producing the desired level of output, what should the firm do to minimize costs

hires fewer workers and pays a lower wage

When comported to a perfectly competitive labor market, a monopsony labor market

The quantity of labor demanded is equal to the quantity of labor supplied

When the competitive labor market is in equilibrium, we know that

The government required another year of college before a teacher could begin teaching

Which of the following would cause the supply of teachers to decrease

the market price of electrical repair and installation services increases

an increase in the market demand for electricians might occur if