Chptr 28 MyPearson Study Guide
An individually competitive firm faces a perfectly ___________labor supply curve - it can hire all the labor it wants at the going market wage rate. The industry supply curve of labor slopes ________________
elastic, upward
When U.S. firms are the home firms engaging in labor outsourcing, the effects are ________ wages and ________ employment in the relevant U.S. labor markets
lower, decrease
Explain what happens to the elasticity of demand for labor in a given industry after each of the following events. a. A new manufacturing technique makes capital easier to substitute for labor. The elasticity of demand for labor becomes_____________ b. There is an increase in the number of substitutes for the final product that labor produces.The elasticity of demand for labor becomes __________________ c. After a drop in the prices of capital inputs, labor accounts for a larger portion of a firm's factor costs. The elasticity of demand for labor becomes ________________________
more elastic, more elastic, more elastic
The change in total __________ due to a one-unit change in one variable____________ , holding all other ______________ constant, is called the marginal product (MP). When we multiply marginal product times _____________, we obtain the marginal revenue product (MRP).
output, input, input, marginal cost
A profit maximizing firm will hire inputs in combinations
such that the marginal physical product per last dollar spent on each factor of production is equalized
The monopolist hires fewer workers than the perfect competitor because
the monopolist produces less that the perfect competitior and needs less labor, other things being equal.
If the marginal productivity of labor increases, the ________ curve for labor will shift to the ________.
Demand, RIght
The market demand curve for labor
Downward sloping
Changes in working conditions in an industry can affect its labor demand curve but not its labor supply curve
Fa;se
The marginal revenue curve for a monopolist always lies above the downward-sloping product demand curve.
False
The market demand curve for labor is a simple horizontal summation of the labor demand curves of all individual firms
False
A perfectly competitive firm determines that its MRP of labor divided the wage equals 1.2. This firm should
Hire more labor
The net short-run effects of outsourcing on U.S. wages and employment are
Mixed
Just as the MRP is the perfectly competitive firm's input demand curve, the MRP is also the _______________ input demand curve.
Monopolists
The current wage rate is $20, and the rental rate of capital is $500. A firm's marginal physical product of labor is 160, and its marginal physical product of capital is 20,000. Is the firm maximizing profits for the given cost outlay
No, marginal physical product of labor per dollar spent on wages is not equal to the marginal physical product of capital per dollar spent on captial
In the short-run, labor outsourcing by U.S. firms tends to
Reduce both U.S. wages and employment
A monopolist's demand curve for labor
Slopes down b/c the law of diminish marginal returns & b/c the monopolist must lower price
Each firm purchasing labor in a perfectly competitive market can purchase all of the input it wants at the going market wage.
True
If a perfectly competitive industry in the output market suddenly became one in which there is monopoly in the output market, the amount of employment would fall
True
In a perfectly competitive labor market, firms are price takers.
True
In a prefectly competitive market, firms will hire workers up to the point where the wage rate equals the marginal revenue product.
True
The marginal product of labor represents the extra output attributed to employing additional workers.
True
To minimize total costs for a particular rate of production, the firm will hire factors of production up to the point at which the marginal product per last dollar spent on each factor of production is equalized.
True
Under conditions of perfect competition in both product and labor markets, the demand for labor is a derived demand
True
Because the demand for labor is a derived demand that depends on both the _______________rate and the______________ of final output, the market demand curve for labor is not a simple horizontal summation of the labor demand curves of all individual firms. The market demand curve for labor does slope_______________ Other things equal, an increase in the productivity of labor will lead to - Quizlet messed up - answer is "HIGHER WAGES
Wage, Price, Downward
Suppose that until recently, U.S. firms that produce digital apps had been utilizing only the labor of qualified U.S. workers at a wage rate of $33per hour. Now, however, these firms are outsourcing to Russia, where qualified workers are available at a dollar wage rate of $19per hour. Evaluate the effects of this new U.S. app-labor outsourcing initiative on U.S. and Russian employment levels and wages.
Wages and employment in the US will decline,wages and employment in Russia will increase.
Workers MPP 100 150 101 170 102 185 103 198 104 208 105 215 The table above gives some data from the production function of a firm that is a perfect competitor in both the product and labor markets. The wage rate in the industry is $260 and the price of the good produced is $20. The profit-maximizing quantity of labor to hire is
With the employment of the 103rd worker the MRP (=Pproducttimes ×MPP) equals the MFC (= W) at $260
Which of the following statements is not correct: The price elasticity of demand for a variable input will be greater
The price elasticity of demand for a variable input will be greater the longer the time period available for adjustment.
If the MRP of labor is less than the wage rate, the perfectly competitive firm will
decrease employment
When a firm sells its output in a monopoly market, marginal revenue is ________________ than price.
less
The market demand curve for labor is
less elastic than the horizontal summation of the individual firms' demand curves because output price changes as total output changes.
For a monopolist, marginal revenue
less than the price
For a firm facing a perfectly elastic supply of labor, the employment of workers will continue until
Marginal factor = Wage rate
A firm is minimizing costs of production. The wage rate is $400 per worker, and the relevant price of capital is $2,000 per unit. The price of the final product is $10, and the marginal product of labor at the cost-minimizing quantity of labor is 20. The marginal product of capital is
100 units, - Given the values for the MPP of labor, the wage rate, and the price of capital, the MPP of capital must be 100 to achieve the equalization of each factor's MPP per dollar spent that is required for cost minimization.
A monopoly firm hires workers in a perfectly competitive labor market in which the market wage rate is $60 per day. If the firm maximizes profit, and if the marginal revenue from the last unit of output produced by the last worker hired equals $5, what is the marginal physical product of labor? nothing
12
Which of the following is not a key factor that influences the elasticity of demand for labor?
Availability of a labor market.
The labor demand curve will shift for all of the following reasons except
Changes in wages in a competing industry
The following table gives final product price elasticity data for four industries. Industry A B C D Price Elast of Demand 1.6 1.4 1.0 1.8
D - 1.8
Labor outsourcing by U.S. firms tends to ________ U.S. wages and employment. Whenever foreign firms engage in labor outsourcing in the United States, U.S. wages and employment tend to ________.
Decrease, increase
Explain why the short-term effects of outsourcing on U.S. wages and employment tend to be more ambiguous than the long-term effects
In the short run, wages and employment decrease in U.S. labor markets where the outsourcing is done by U.S. firms. Just the opposite, wages & employment increase in U.S. when outsourcing is done by foreign firms. In the long run, wages/emplymnt in U.S. labor markets tend to increase b/c outsourcing allows both foreign & U.S. firms to specialize in producing things they are most efficient at. - which increase profit, wages employment for all etc.
All of the following can cause the demand curve for labor to shift to the right except
Increase in the supply of labor
Which of the following will not shift the supply of labor?
Increase in the wage rate
A firm that employs labor located outside the country in which it is located engages in
Labor outsourcing
Advancces in telecommunications and digital networking are making foreign labor more easily ________________for home labor. Home firms'__________________ of foreign labor for home labor is known as labor outsourcing. In the short run, outsourcing by U.S. firms ______________ the demand for labor, market wages, and equilibrium employment in U.S. labor markets. Outsourcing by foreign firms that hire U.S. labor__________________ the demand for labor, market wages, and equilibrium employment in U.S. labor markets. The net short-run effects on U.S. wages and employment are mixed. In the long run, outsourcing enables U.S. firms to operate more efficiently and this activity generates overall ____________ for U.S. residents.
Substitutable, Substitution, reduces, increases, gain from trade
Workers MPP 10 24 11 20 12 16 13 12 14 8 15 4 A perfectly competitive firm faces the marginal product schedule shown above. The price of the product is $2525 and the wage rate is $320 per worker. The marginal revenue product of the 14th worker is
The 14th worker's marginal physical product is 88 units. Since the firm is able to sell its output at the fixed price of $25, the 14th worker's MRP is $200 8x25 = 200
The MRP curve of the monopolist is
always less elastic than the MRP curve of the perfect competitor.
The price elasticity of demand for an input
is larger the longer the time period being considered.
