Quiz 10

The labor market for teachers in a small, isolated community that has one school district would be best described as a(n)

monopsony.

Refer to the labor market diagram, where D is the labor demand curve, S is the labor supply curve, and MRC is the marginal resource (labor) cost curve. If this were a monopsonistic labor market, the equilibrium wage rate and level of employment would be

$5 and 3, respectively.

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that when he hires different numbers of workers, the corresponding total revenues are as shown in the table. What is the marginal revenue product of the third worker?

$600

Refer to the table. The marginal product of the third unit of the resource is

4

Which of the following decreases in labor demand is due to a change in the price of a related resource?

An increase in the price of chemical equipment increases the cost of producing fertilizer, thus decreasing the demand for workers who make fertilizer

The demand for airline pilots results from the demand for air travel. This fact is an example of

D) the derived demand for labor.

A cost-minimizing firm using two inputs, x and y, will employ inputs so that

MPx/ Px = MPy / Py.

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the

MRP curve to shift to the right.

Refer to the diagram. Assuming no union or relevant minimum wage, the firm represented will hire

Q2 workers and pay a W1 wage rate.

Which of the following decreases in labor demand is due to a change in product demand?

The widespread availability of news on the web reduces the demand for newspaper workers.

Refer to the graph. An inclusive union or an industrial union will set the wage rate at

Wu.

The American Medical Association, a physicians' union, is a good example of a(n)

craft union.

Two resource inputs, capital and labor, are complementary and used in fixed proportions. An increase in the price of capital will

decrease the demand for labor

What concept is associated with the notion that employers can get greater effort from workers by paying them a relatively high, above-equilibrium wage?

efficiency wages

A profit-maximizing firm will

expand employment if marginal revenue product exceeds marginal resource cost.

The principal-agent problem as it applies to labor employment refers to

firms having the profit incentive, while workers may be shirking on the job.

Which of the following factors is not relevant in explaining the persistence of wage differentials?

free public education

A technological improvement that causes an increase in the marginal product of a resource will

increase the demand for the resource.

Refer to the graph. If a monopsonist bargains with an inclusive union, as shown, the wage rate will be

indeterminate in the graph

If the marginal revenue product (MRP) of labor is less than the wage rate

less labor should be employed.

Critics of the minimum wage argue that as an antipoverty device, it is "poorly targeted." By this they mean that

many who benefit from the minimum wage are teenagers or not poor.

Real wages in the United States are

relatively high, but not as high as in some other industrially advanced nations.

A firm will employ more of an input whose relative price has fallen and, conversely, will use less of an input whose relative price has risen. Thus, a fall in the price of capital will increase the relative price of labor and thereby reduce the demand for labor. This describes the

substitution effect.

Marginal resource cost is

the increase in total resource cost associated with the hire of one more unit of the resource.

According to the marginal productivity theory of resource demand, the labor-demand schedule for a producer selling in a purely competitive market is

the same as the marginal revenue product schedule.