Module 11 - Labor Markets

Which of the following will not cause the labor demand curve to shift to the right?

an increase in the market wage rate

A decrease in the wage rate causes

an increase in the quantity of labor demanded.

As more output is produced, the marginal product of labor declines

because of the law of diminishing returns.

A backward-bending labor social curve

curve qui part normalement mais qui revient dans l'autre sens.

Taste-based discrimination

discrimination that occurs when people's preferences cause them to discriminate against a certain group

Compensating differentials are associated most closely with what?

hazardous jobs

Compensating differentials

higher wages that compensate workers for unpleasant aspects of a job.

Firms use information on labor's marginal revenue product to determine

how many workers to hire at each wage rate.

A person's stock of skills to produce economic value is referred to as

human capital.

A reason why a perfectly competitive firm's demand for labor curve slopes downward is that

in the short run, as more labor is hired, labor's marginal product falls because of the law of diminishing returns.

The demand for labor is described as a derived demand because

it is derived from the demand for products that use labor in the production process.

As population increases

labor supply curve shifts to the right.

The wage rate is the opportunity cost of

leisure.

A firm's demand for labor curve is also called its

marginal revenue product of labor curve.

Equilibrium in the labor market

occurs where the demand curve for labor and the supply curve for labor intersect.

When expectations cause people to discriminate against a certain group

statistical discrimination.

The effect of an increase in labor demand

that will cause the equilibrium wage and the equilibrium level of employment to rise.

The effect of an increase in labor supply

that will cause the equilibrium wage to fall but the equilibrium level of employment to rise.

Marginal product of labor

the additional output a firm produces as a result of hiring one more worker.

Marginal revenue product of labor

the change in a firm's revenue as a result of hiring one more worker.

Marginal revenue product for a perfectly competitive seller is equal to

the change in total revenue that results from hiring another worker.

Derived demand

the demand for a factor of production; it depends on the demand for the good the factor produces.

A firm's primary interest when it hires an additional worker is

the extra revenue the firm realizes from hiring that worker.

What is the difference between labor's marginal product and marginal revenue product?

the marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue.

If the productivity of workers rises

the marginal revenue product increases, causing the labor demand curve to shift to the right.

One reason why the average salary of Major League Baseball players is higher than the average salary of college professors is

the marginal revenue product of baseball players is greater than the marginal revenue product of college professors.

Worker discrimination occurs when

workers refuse to work with persons of a different race.