Micro eco Chapter 16
The figures below show the supply and demand for labor in the software development industry. a. The equilibrium wage is $____ thousand and the equilibrium quantity is ____ thousand workers. b. Suppose the government offers more scholarships to students studying computer programming.(shift to right) this ____ the supply of labor in the software development industry. The resulting equilibrium wage ____ and equilibrium quantity ____ c. A new technology increases the marginal product of labor for software developers.(shift up and right) This ____ the demand for labor in the software development industry. The resulting equilibrium wage____ and equilibrium quantity ____.
$90 40 decreases increases increases increases increases
A reduction in the ____ product of labor would shift the entire ____ curve to the left.
Blank 1: marginal Blank 2: demand
Which of the following is true? 1. An increase in the productivity of a resource will reduce the demand for the resource and vice versa 2. An increase in the productivity of a resource will increase the demand for the recourse and vise versa 3. A decrease in the productivity of a resource will increase the demand for the resource and vice versa
2. An increase in the productivity of a recourse will increase the demand for the recourse and vice versa
Fresh Veggie is one of many small farms in Florida operating in a perfectly competitive market. Farm labor is also perfectly competitive, and Fresh Veggie can hire as many workers as it wants for $20 a day. The daily productivity of a tomato picker is given in the table below. Number of Workers Bushels of Tomatoes 0 0 1 12 2 22 3 30 4 35 5 38 6 40 If a bushel of tomatoes sells for $5, Fresh Veggie will hire: ____ worker(s).
4
When labor and capital are complimentary:
A decline in the price of capital increases the demand for labor through the output effect
What exemplifies the substitution effect in regards to substitute resources?
A decline in the price of machinery prompts a firm to substitute machinery for labor allowing it to produce its output at the lower cost of machinery
Since higher skilled workers are cheaper per output relative to low skilled workers, when the minimum wage increases, employers might hire ____(more/less) skilled and experienced workers, and ____ (more/less) young and unskilled workers.
Blank 1: more Blank 2: less
When workers respond to higher wages by working more, it is the result of the _____ effect; but when they respond to higher incomes by demanding more leisure, it is the result of the ___ effect.
Blank 1: price Blank 2: income
Which of the following best exemplifies the concept of the ease of resource substitutability
A rise in the price of one type of wood used for homes causes a drop in the amount demanded as producers substitute it with less expensive wood types
The ____ price is what a producer pays to use a factor of production for a certain period or task; the ____ price is what a producer pays to gain permanent ownership of a factor of production.
Blank 1: rental or rent Blank 2: purchase
A decrease in the marginal product of labor would _____ the entire demand curve to the ______.
Blank 1: shift or move Blank 2: left
Madison has a full-time job but is considering going back to school for a master's degree. Which of the following is not a cost she needs to consider when Madison decides whether or not to continue her education?
Additional job opportunities
The following statement is true about what type of market; the lower price accompanying each increase in output (total product) apples not only to the marginal product of each successive worker but also to all prior output units that otherwise could have been sold at a higher price
An imperfectly competitive market
What summarizes the effects of the resource demand market as a result of an increase or decrease in product demand?
An increases in the demand for a product will increase the demand for a resource used in its production A decrease in the demand or a product will decrease the demand for a resource used in its production
In all competitive markets, the equilibrium is found at the point where the ____ and ____ curves intersect.
Blank 1: supply Blank 2: demand
In some cases when the labor market is inefficient, a minimum wage appears to cause a small amount of ____ . In others, it seems to change who is ____.
Blank 1: unemployment Blank 2: employed or working
If the supply of gasoline falls, it will push the price of gasoline ____, reducing the use of gas-guzzling farm machinery, ____ the ____ product of farm workers.
Blank 1: up or higher Blank 2: increasing Blank 3: marginal
When changes in technology increase the marginal product of labor, they are labor-____ , but, when they decrease the marginal product of labor, they are labor-____.
Blank 1: augmenting Blank 2: saving
The profit-maximizing quantity of labor that the firm decides to use occurs where the labor ____ curve intersects the market- ____ level.
Blank 1: demand Blank 2: wage
Land, Labor, and Capital are ____ of ____.
Blank 1: factors Blank 2: production
If product demand ____ it will ____ the product price, increasing the value of the ____ product, shifting labor ____ curve to the right..
Blank 1: increases Blank 2: increase Blank 3: marginal Blank 4: demand
At the profit-maximizing quantity of ________ , the value of the last worker's marginal _____ is greater than or equal to marginal profit.
Blank 1: labor Blank 2: product
In the last year, as a result of a 25% decrease in the cost of laptops, every sales person can now be issued a computer.Managers know that salesmen who use laptops can meet with additional customers everyday because less time is wasted using cell phones to talk with company employees and gather needed information to make a sale. Hence, the new lower price of laptops will ______ demand for new sales people
change
Ease of substitutability, elasticity of product demand, and the ratio of resources cost to total costs are all factors that:
Determine the elasticity of resource demand
Which of the following exemplifies the concept of "technological advance" as contributing to an increase in the quality of other resources
Dockworkers employed with unloading cranes are more productive than dockworkers employed with older conveyor-belt systems
Suppose you run a business that specializes in producing graphic T-shirts, using labor as an input. Hourly Wage ($) Quantity Demanded Quantity Supplied 24 0 600 22 50 550 20 100 500 18 150 450 16 200 400 14 250 350 12 300 300 10 350 250 8 400 200 Based on the table above, graph the labor supply and labor demand curves and identify the market equilibrium wage and quantity using the graph below.
EQ: (300,12) demand curve: (400,8) to (0,24) supply curve: (200,8) to (0,24) supply and demand cross at (300, 12)
Which of the following are true about why the marginal resource cost of labor exactly equals the market wage rate in a competitive labor market
Each firm hires a small fraction of market supply, therefore it is a wage taker because it cannot influence the market wage rate For each additional unit of labor hired, total resource cost increases by exactly the amount of the constant market wage rate Resource price (market wage rate) and resource cost (marginal resource cost) are equal for a firm that hires a resource in a competitive labor market
____ rent refers to the gains that workers and owners of capital receive from supplying their labor or machinery in factor markets.
Economic
Large telecom companies like AT&T routinely send repair technicians to customers' homes. Although the technicians are skilled laborers, they must usually train on the job. It takes some time for them to reach a high standard of quality. In addition, their work cannot be constantly supervised. Which of the following explain why an efficiency wage could help telecom companies increase the productivity of repair technicians?
Efficiency wages are wages that are above the equilibrium wage. Workers that receive efficiency wages have a greater incentive to work hard.
What may change the demand for a specific resource?
changes in the prices of other resources
Erd > 1 is Elastic, Unit-Elastic, or Inelastic?
Elastic
The determinate of the elasticity of resource demand are:
Elasticity of product demand Ratio of resource cost to total cost Ease of resource substitutability
In producing any good or service, the resource prices of each input used to produce a product play the main role in determining the quantities that will be combined from the following
Entrepreneurial ability, land, capital, and labor
True or False: A highly trained, skilled, and productive worker will be in great demand but will have trouble finding employment in the industry in. which they are skilled and productive
False
True or False: A strong demand and plentiful supply of labor result in high wages rates in the industrially advanced nations
False
True or False: When resource prices fall, competitors in an imperfect market are quick to increase output to meet the additional demand for their products de to new lower prices for customers
False
True or False: The marginal revenue product (MRP) of the imperfectly competitive seller falls for two reasons: MP diminishes and product price falls as output decreases
False: It falls because MP finishes and product price falls as output increases
Which of the following exemplify the rule for hiring resources as it pertains to hiring more labor?
If the number of workers a firm has hired is such that the MRP of the last worker exceeds his MRC, the firm can profit by hiring more workers If the number of workers a firm has hired is such that the MRP of the last worker is equal to his MRC, the firm can maximize profits If the number of workers a firm has hired is such that the MRC of the last worked exceeds his MRP, it can increase profit by discharging workers
Which of the following exemplify the output effect of substitute resources
If, in a firm, the price of machinery has fallen, the costs of producing various outputs must also decline A greater amount of output due to lower costs increases the demand for all resources, including labor Because of lower costs associated with a decline in the price of machinery, a firm finds it profitable to produce and sell a greater output
Suppose home builders report to the federal government that housing starts have risen by 20% over the last quarter. How will this affects demand for product resources used to build homes?
Increase
What can higher wages do?
Increase the quantity of labor supplied Increase the opportunity cost of working Decrease the quantity of labor supplied
Erd < 1 is Elastic, Unit-Elastic, or Inelastic?
Inelastic
What is true about the marginal productivity of any resource?
It will vary with the quantities of other resources used with it
The imperfect competitors relative reluctance to employ more resource and produce more output when resource prices fall reflects _____
Its tendency to restrict output in the product market
Which of the following reflect criticisms of market of market imperfections in regards to the marginal productivity theory of income distribution
Labor unions and labor discrimination impact wages that are paid
In general, economists place all factors of production into which three categories?
Land, labor, and capital
The 4th of July weekend has arrived. Millions of people go to the beach for the long holiday weekend. Which of the following scenarios illustrates demand derived from this holiday.
Local communities hire extra life guards Restaurants double their meat and produce orders
The marginal revenue product (MRP) of the imperfectly competitive seller falls for two reasons because _______
MP diminishes and product and product price falls as output increases
What describes the concept of elasticity of product demand?
Other things equal, the lower the price of elasticity of product demand, the lower the elasticity of resource demand
Many shifts in the labor demand curve can traced to three determinants. Which of the following are the three determinants?
Output prices Supply of other factors Technology
When an increase in quantity used of one resource leads to the increase of the use of another resource in the same production process and vice versa, the resources used are called ____ resources
complementary
When wages go up, workers have more money, so they might enjoy more ____ time.
leisure
The super widget workers went on strike and negotiated a large hourly pay increase. Labor is the most used resource in super widgets contributing to 75% to the cost of making them. The product demand for super widgets is elastic and very sensitive to price changes. Which of the following are true about the new labor wage agreement and the resource demand for labor
Makes demand for labor highly elastic There will be a decrease in the demand for labor
____ product is the increase in output that is generated by an additional unit of input.
Marginal
What is it called when income is distributed in society according to the contribution of the resource to society's output?
Marginal productivity theory of income distribution
A firms demand schedule for labor or any input to produce a good or service can also be known as its:
Marginal revenue product schedule
Gabriel works as a waiter for a catering business. He is scheduled to work an event on Saturday that would earn him $100, Gabriel's sister invites him to go horseback riding on Saturday instead, but Gabriel decides to go to work. This implies that Gabriel's opportunity cost of working is:
less than $100.
For which of the following reasons is the study of resource pricing important
Money-income determination Understanding policy issues Cost minimization Recourse Allocation
If the graph shown displays a competitive labor market:
P* represents the equilibrium wage.
In an imperfectly competitive markets, a _______ price accompanying each increase in output) total products) applies not only to the marginal ____ of each successive worker but also to all prior output units that otherwise could have been sold at a _________
lower; product; higher
Erd AKA the elasticity of resource demand) is the _______
Percentage change in resource quantity / Percentage change in resource price
Since the firm is a price-taker in a competitive market, the firm cannot control the going price of inputs or the going wage of workers, so maximizing profit is focused on
making the right choice about the quantity to produce.
As cited in McConnell, many policy issues surrounds the _____ market
Resource
What plays the main role in determining the quantities of land, labor, capital and entrepreneurship that will be combined in producing each good or service
Resource prices
The purchase price for each of the inputs required to produce a good or service is referred to in economics as _______
Resource pricing
What results in high wage rates in the industrially advanced nations?
Strong demand and scarce supply of labor
The change in direction for labor demand will be reliant upon whether labor and capital are production _______
Substitutes Compliments
The market demand curve for a particular resource is derived by ____ horizontally the individual demand or MRP curves for all firms hiring that resource
Summing
The decreasing marginal product from the addition of one additional unit of labor is due to what law?
The Law of Diminishing Returns
The _____ effect of resources indicates that a firm will purchase more of an input whose relative price has declined, and conversely, use less of an input whose relative price has increased
substitution
When the relative cost of a resource used to produce a product decreases, such as the cost of machinery, a decision must be made whether to increase the use of more machines and decrease the use of another resource input such as labor in order to produce the same amount of output at a lower cost. This is called the _____ effect
substitution
The number of workers and the opportunity cost of providing their labor determine labor ____.
supply
A firm in a competitive labor market is wage _____, meaning that for each additional unit of labor hired, total resource costs ______ (increases/decreases) by exactly the amount of the constant market wage rate
taker; increases
In order to mitigate the inequalities associated with the marginal productivity theory of income distribution government would need to increase ______ and ______
taxes; spending
Recall that _____ advances increase the quality of other resources.
technological
A firm operating in pure competition has a downward sloping demand curve due to the fact that ____
The curve identifies an inverse relationship between price paid and quantity purchased, other things equal
Because resource demand is derived from product demand, the strength of the demand for any resource will depend on
The demand for the good or service it helps produce The market value of price of the good or service it helps produce The productivity of the resource in helping to create a good or service
Because resource demand is derived from product demand, the strength of the demand for any resource will depend on ______. (3 things)
The demand for the good or service it helps produce The productivity of the resource in helping to create a good or service The market value of price of the good or service it helps produce
When economics measures the sensitivity of resource quantity to changes in resource prices this is called:
The elasticity of resource demand
Which of the following infers the relationship between market wage, MRC, and MRP?
The firm should hire more workers as long as the market wage or MRC is less than MRP
What best describe the ease of resource substitutability as a determinant of the elasticity of resource demand?
The greater the substitutability of other resources, the more elastic is the demand for a particular resource
What best describes derived demand?
The orders for farm tractors by farmers to grow crops AKA: Demand derive from another product
Leo runs a bicycle repair shop. He recently examined his information on wage and employment levels and noted that he employs the same number of workers today that he employed in 2012. However, real wages (controlling for inflation) increased quite substantially between 2012 and 2016. Assume the supply of labor remained constant over this time period. Which of the following are two possible explanations for why Leo's workers were paid more in 2016?
The price of repairing a bicycle was higher in 2016 than in 2012. Marginal product increased during this time (workers are more productive). There was a smaller labor force in 2016 than in 2012.
derived demand for a resource depends on:
The price of value received from the product it produces he productivity of the resource used to create the good or service
Maximizing profit in a competitive market is focused on making the right choice about the quantity to produce because
the firm is a price-taker and cannot control the price of inputs.
What are inversely related and are present when the cost of an input changes ?
The substitution and output effects
The larger the proportion of the total production cost accounted for by a resource
the greater the elasticity of demand for that resource
What identifies how the productivity of any resource may be altered over the long run?
Through technological advance Through the quality of the variable resource By the quantities of other resources
True or False: As a production manager you have calculated the MRP and MRC related to the wage rate of hiring workers to make super widgets. Now you can plot a labor demand curve based upon the MRP data.
True
True or false: Human capital is so crucial in determining how labor markets work that economists sometimes consider it the most important factor of production.
True
For what reasons is the study of resource pricing important?
Understanding policy issues Resource allocation Cost minimization Money-Income determination
Erd = 1 is Elastic, Unit-Elastic, or Inelastic?
Unit-Elastic
What infers the relationship between the productivity of a resource and the demand for that resource?
Unproductive resources that turn out minimally valued products will have little demand Highly productive resources that turn out highly valued products will be in great demand
The expenditures that firms incur in acquiring economic resources flow to households in the form of _____
Wages, rent, profit, interests
Which of the following do not exemplify how government policy issues are grounded on resource pricing:
What should be the level of quality for a good or service What should be the price of the good or service How many units of a good or service to produce
As long as the value of the marginal product is greater than or equal to the marginal cost.
a competitive firm should keep hiring.
The law of diminishing returns refers to ______
a point at which the level of profits of benefits gained is less than the amount of money or energy invested
In a purely competitive market for labor, a firm cannot influence the wage rate because each firm hires:
a small fraction of the market supply
Recently, some college alumni started a moving service for students living on campus. They have 3 employees and are debating hiring one more. The hourly wage for an employee is $24 per hour. An average moving job takes 3 hours. The company currently does 4 moving jobs per week, but with one more employee, the company could manage 6 jobs per week. The company charges $100 for a moving job. a. The new employee's marginal product of labor is: b. The value of that marginal product is: $ c. The moving service should ____ another worker
a. 2 moving jobs. b. $100 × 2 = $200. c. should ex: The moving service should hire another worker. The worker will cost $24 per hour times 6 hours (1 job takes 3 hours and the new worker can do 2 jobs): $24 × 6 = $144, which is less than the value of the worker's marginal product of $200.
In deciding whether the opportunity cost of not being able to work another job outweighs the benefits, the worker will have to consider not only the wages each other job offers, but also
any other perks of each job.
Someone who owns physical capital is a
capitalist
A firm's product has recently experienced the following, a small price increase of $5 per unit very small improvement in the MP of labor of .05 (1/2 of 1%) but the price of a major and expensive complimentary resource product increased by $10 per unit. The demand for labor most likely:
decrease
The value of the marginal product is identical to the firm's ____ curve for labor.
demand
If a producer who hires labor in a competitive labor market decides to purchase a new, automated machine that completes the work of 30 employees, we would expect the labor _______ curve in that market to shift to the _______.
demand; left
The total, or market, _____ curve for a specific recourse shows the various total amounts of the resource that firms will purchase or hire at various resource ________
demand; prices
A MRP schedule (table) is also a firm's ____ for labor because each point on the schedule or curve indicates the number of workers the firm would have to hire at each possible ____ rate
demand; wage
The income effect occurs when workers respond to higher incomes by
demanding more leisure.
The demand for cloth is ____ , in part, from the demand for clothes.
derived
The demand for labor is ____ from the demand for goods and services.
derived
The purchase of welding equipment at an auto factory to build cars describes what economist call _____ resource demand
derived
Because the demand for labor is a(n) _____ demand, the elasticity of the ____ for the output (product) that the labor is producing will influence the elasticity of the demand for labor
derived; demand
As one more additional variable input such as labor is applied to fixed capital such as plant and equipment, the marginal product, or additional output, will fall. This describes the law of ______
diminishing returns
Gains that workers and owners of capital receive from supplying their labor or machinery in factor markets is called
economic rent.
The _____ of resource demand is the sensitivity of resource quantity to changes in resource prices
elasticity
The income recieved for supplying a resource in the production process in ______ the value of the resource in the production process
equal to
In all competitive markets, the ____ is found at the point where the supply and demand curves intersect.
equilibrium
Facts and debates relating to resource market policy issues are often centered on the following
excessive pay to corporate executives redistribution of income through taxes and transfer payments the encouragement or restriction of labor unions should the minimum wage be increased
Economists refer to the pattern of income that people derive from different factors of production as the
factor distribution of income.
How much income people get from labor compared to land and capital is the
factor distribution of income.
If a person agrees that resources should be paid based upon the value of their creation then income payments based on marginal revenue product provide a ____ and _____ distribution of society's income
fair; equitable
Because of the opportunity cost of working, if workers get paid more per hour, they tend to work _____ hours.
fewer
Minimum wage laws are examples of price
floors
The demand for labor resource will increase, meaning the demand curve will shift rightward when:
the productivity of marginal productivity of labor increases the demand for the product produced by that labor increases the price of a substitute input decreases, provided the output effect exceeds the substitution effect the price of the a substitute input increases, provided the substitution effect exceeds the output effect the price of a complementary input decreases
The question of how much labor a firm will hire comes down to whether added workers are
generate more revenue than what it costs to hire them.
Suhani works at a call center where she can choose her hours, earning $12 per hour worked. Suhani is planning to spend three hours working on Friday, but a friend calls and invites her to go bungee jumping instead. If Suhani decides to go bungee jumping instead of working, we know that her opportunity cost of working for three hours is:
greater than $36.
A competitive firm should keep hiring as long as the value of the marginal product is
greater than or equal to the marginal cost.
Three of the 10 fastest-growing occupations in percentage terms are related to which industry
health care
The market demand curve for a particular resource is derived by summing ________
horizontally the individual demand or MRP curves for all firms hiring that resources
The expenditures that firms incur in acquiring economic resources flow as wages, rent, interest and profit to the incomes of ______ that supply those resources
households
The productivity of workers is determined by
human capital.
The ____ competitive sellers produces less of a product than a ________ competitive seller and does it demanding fewer resources
imperfect; perfect
A ______ competitive seller does not expand the quantity of resource inputs by as large percentage as does the _____ competitive seller because the price the former recipes for its product falls the they increase output
imperfectly; perfectly
Other things equal, an increase in the demand for a product will _______ (increase/decrease) the demand for a resource used in its production, whereas as decrease in product demand will ______ (increase/decrease) the demand for that resource
increase; decrease
When the productivity of a product resource increases and makes a firm's product more efficient and or effective, it will ____ the demand for the resource, and should the productivity if a resource decline, it will ____ the demand for the resource.
increase; decrease
People being paid according to their marginal productivity is often criticized because people's mental and physical attributes differ and their opportunities to enhance these qualities differs. These characteristics lead to what kind of problem?
inequality
Based on the local price of each factor of production, a profit-seeking firm will choose the combination of ____ that maximizes profit.
inputs
The MRP = MRC rule is similar to the MR=MC profit maximizing rule. The basic premise of the two rules is the same; however the point of reference is now _____ of a resource, not _____ of a product
inputs; outputs
The marginal revenue product: schedule is also the firms demand schedule for labor of any production input because:
it shows the quantity of labor that will be hired (demanded) based upon the revenues each additional unit of labor hired produces
Firms that produce goods using workers are the "buyers" of ____
labor
Individuals who work are the "suppliers" of ____.
labor
The number of workers and the opportunity cost of providing their labor determine
labor supply.
Farming in poor countries is considered to be _______ intensive because _______.
labor; labor is relatively cheaper than machinery in poor countries
Economists usually categorize all non-work activities under the term ____.
leisure
The increase in output that is generated by an additional unit of input is called
marginal product.
Improvements in the quality of a variable resource increase _____ and therefore its demand
marginal productivity
The federal government has just increased the amount of government land it leases to cattle ranchers. This increases in available land to graze cattle will increase labor's ______ and thus, ______ demand
marginal productivity; labor
If marginal product doubles
marginal revenue product doubles as well
A firm's demand schedule for labor or any input to produce a good or service can also be known as its ______
marginal revenue product schedule
In order to ____ profit, a firm will purchase or hire a resource in an amount at which the resource's marginal revenue product equal its marginal resource cost (MRP=MRC)
maximize
Based on the local price of each factor of production, a profit-seeking firm will choose the combination of inputs that
maximizes profit.
Opponents of a _____ wage see it as a form of government interference in the free market, one that raises the cost of doing business, causing unemployment in the process.
minimum
When there is an effective ____ wage, fewer people are employed than when the market is at equilibrium, causing unemployment.
minimum
supporters of a ____ wage usually argue that it is needed to protect low-paid workers from ruthless employers and to guarantee workers an acceptable standard of living.
minimum
To raise wages or improve non-wage benefits and capture some surplus for workers, unions must have, at a minimum, a ____ or near ____on labor in a particular market.
monopoly monopoly
In general, the larger the membership of a union, the _____ power it has.
more
Jian works as a delivery man and can work as many hours as he likes for $12 an hour. He typically works 40 hours a week. Recently, his pay has been cut. If Jian decides to work _______, this indicates that the _______ effect dominates his labor supply decision.
more hours; income
In the resource market, the output effect means that the firm will purchase ______ of one particular input when the price of the other input falls and ____ of that particular input when the price of the other input rises
more; less
If the demand for pizza increases, it is highly likely that the demand for:
mozzarella cheese will increase.
The table shown displays the production schedule for a bakery in a competitive market that sells cookies for $2 each. Number of Workers Quantity of Cookies 0 0 1 80 2 180 3 280 4 360 5 420 6 470 7 510 8 540 9 560 What is the value of the marginal product of labor for the sixth worker?
not $50, maybe correct ans is $100
Firms operating in pure competitive markets have demand curve slopes that slope downward because:
of diminishing marginal returns
A higher wage means more income but also increases the ____ cost of working.
opportunity
Economists usually categorize all non-work activities as a(n) ____ cost of working.
opportunity
When people talk about investing money, they mean that they have lent their money to someone who will use it to buy ____ capital.
physical
Countries with a declining ____ may have too few workers to power production and too few consumers to drive a healthy ____ for goods and services.
population demand
Changes in non-____ determinants can shift the supply and demand curves for labor right or left.
price
The strength of the demand for any resource will depend on the ____ of the resource and the market ____ of the good or service that the resource helps produce
productivity; price
The output effect means that a firm will:
purchase more of one particular input when the price of the other input falls and less of that particular input when the price of the other input rises
Changes in demand for resources must be distinguished from changes in the _______ _________ caused by changes in the price of the specific resource under consideration
quantity demand
When an increase in the quantity of one resource used in the production process requires an increase in the amount used of another as well and vise versa means that:
resources are complementary
A firm in a competitive market maximizes profits by producing the quantity at which
revenue it earns from the last unit is equal to the cost of producing that unit.
If a producer who hires labor in a competitive labor market decides to purchase a new technology that allows each worker to produce twice as much output as before, we would expect the labor demand curve to shift to the _______ and wages to _______.
right; increase
Suppose your retired grandmother has complained of boredom and is considering taking a part-time job. You should suggest that your grandmother take a job as long as:
she is paid enough to compensate for the opportunity costs she faces by using her time to work
Changes in non-price determinants cause a ____ in the supply and demand curves for labor.
shift
Any event that decreases the value of the marginal product
shifts the labor demand curve to the left.
In a purely competitive market for labor, because each firm hires a _____ fraction of market supply, it cannot influence the market ______
small; wage
Which of the following results in high wage rates in the industrially advanced nations?
strong demand and scarce supply of labor
the degree to which resources are _____ is a fundamental determinant of elasticity
substitutability
The demand for labor resource will increase, meaning the demand curve will shift rightward when:
the productivity or marginal productivity of labor increases the price of a complementary input decreases the demand for the product produced by the labor increases the price of a substitute input decreases, provided the output effects exceeds the substitution effect the price of a substitute input increases, provided the substitution effect exceeds the output effect
What curve shows the various total amounts of the resources that firms will purchase or hire at various resource prices
the total, or market demand curve for a specific resource
In general, a firm will hire a worker so long as
the worker generates more revenue than it costs to hire them.
The existence of a good or service that no one wants to buy will have the following effect on the resources used to produce it:
there will be no demand for the resources used
Countries with a declining population may have
too few workers to power production and too few consumers to drive a healthy demand for goods and services.
The elasticity of demand for a resource is high when the proportion of _____ accounted by the resource are large
total production costs
The rental price is what a producer pays to
use a factor of production for a certain period or task.
The firm's demand curve for labor is identical to the
value of the marginal product curve.
The MRP = MRC rule tells us that, in pure competition, a firm will hire workers up to the point at which the market _____ rate (its MRC) is equal to its MRP (acronym)
wage; MRP
A resource that is phenomenally efficient in producing something that no one wants to buy:
will exhibit no demand