Theory of MNE - PART 2
All of the following firms are producing on the same output isoquant. Which firm will use the most labor?
Wage 120$; Hourly price of capital 240$
In the short run
a firm can not add on to an assembly line or introduce new machines to the production process
If the salaries of accountants increase and other conditions remain the same, then
a firm will move to the left along its labor demand curve for accountants
A competitive industry hires 1000 workers. The 1000th worker adds $500 a week to their employer's revenue. If a monopoly took over the industry, then the 1000th worker would likely
add less than 500$ a week to their employer's revenue
Which of the following events will cause the labor demand curve to shift up and to the right?
an increase in product demand
Empirical estimates of the short-run employment affects of minimum wage increases
are very low, partly because it takes a long time for employers to adjust fully to changes in the minimum wage
If a tax is placed on an employer
both wages and employment levels will usually decrease
If the absolute elasticity of labor demand is 2.0, then an eight percent increase in the wage will
decrease employment by 16%
When wages increase, the substitution effect implies that employment will ________ and the scale effect implies that employment will ________
decrease; decrease
Number of Total # of Pots Workers Produced per day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 Referring to Table 3.1, if wages are $50.00 per day and pots sell for $20.00 each, how many potters will the firm hire?
four
If every worker wants ten dollars per hour to work, then wages will
go up by less than 10$
Other things equal, an elastic demand for an industry's output will tend to make the industry's own wage elasticity of demand
high
An employer who is a monopolist in the product market will probably
hire fewer employees than a perfect competitor would
A competitive firm uses two inputs: capital and labor. At its current level of hiring of both inputs, capital's marginal product is 12 while labor's marginal product is 18. Capital's cost (C) is $8 per unit while labor's cost (W) is $9. In the long run, to produce the same output at a lower cost, the firm should
hire more labor and less capital
If the labor market is competitive and coverage is complete, then legislation to enact a minimum wage above the equilibrium wage level would
increase wages and decrease employment
The introduction of new forms of capital generally
increases the own-wage elasticity of labor demand
Employment often increases after an increase in the minimum wage because
independently, labor demand increases significantly at the same time
Declining marginal product of labor
is needed if competitive firms are to stop hiring workers at some point
If labor costs twice as much as capital (per unit), then, in the long run,
labor's marginal product will be twice that of capital's
Long-term unemployment rates are higher in most Western European countries than in the United States because
nonmarket forces keep wages in Western Europe above the equilibrium level
Other things equal, the own-wage elasticity of demand for a category of labor is higher when
other factors of production can be easily substituted for the category of labor
A profit-maximizing firm decides to produce 100 units of output. This implies that the firm will
produce at a point where its isoexpenditure line is tangent to the isoquant curve for 100 units of output
If skilled workers are gross complements with low-skilled immigrant labor, then when there is an increase in low-skilled immigrant labor
skilled workers wages will go up and their employment will go up
The marginal product of labor tells us
the additional output produced by the last employee hired
Economic rent is
the amount by which a worker's wage exceeds his or her reservation wage
When a firm moves to a higher isoquant,
the firm now produces more output
If the hourly wage is $50 and the price of output is $25 then in the short run
the firm should add workers if they add 2 or more units to output
Because workers choose between various employers offering the same type of job based primarily on wages
the firm supply curve for chefs is horizontal
Output is produced with capital and labor. If the price of capital goes up
the firm will more labor per unit output
Because workers have varying preferences about the type of work they like to do,
the market supply curve for chefs is upward sloping
When deciding the salary of a sports star,
the team must consider how much the sports star will cause revenues to increase
If employers are paid a subsidy of $0.75 per hour for hiring teenage workers, then
the teenagers' wage rate will usually increase by less than $0.75 per hour
In the long run a profit-maximizing firm will select capital and labor so that
the wage divided by the marginal product of labor equals the rental cost of a unit of capital divided by the marginal product of capital
If more people enter the labor market for architects, then
the wage rate will decrease and the employment level will increase
For two substitutes in production, if the scale effect dominates
then the inputs are gross complements
If two inputs are complements in production
then the inputs are gross complements
If teenagers and adults are substitutes in production, and the wage of teenagers falls, then
they could be either gross substitutes or gross complements and the employment of adults could rise or fall
Number of Total # of Pots Workers Produced per day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 Referring to Table 3.1, diminishing marginal returns begins with the ________ employee
third
Empirical estimates of cross -wage elasticities show that
well-educated labor is more likely to be complementary with capital than is unskilled labor
Most of a payroll tax is eventually paid by
workers if the supply of labor curve is very inelastic
Which are pays the highest real wage?
A) Nominal Wage $20; Consumer Price Index for Area $100 B) Nominal Wage $50; Consumer Price Index for Area $200 C) Nominal Wage $25; Consumer Price Index for Area $150 D) Nominal Wage $15; Consumer Price Index for Area $50 --> D
Which of the following occurs if a firm pays workers more than the market wage?
All of above occur
If a firm hires another unit of labor, output goes up by 12 units. The wage rate for the unit of labor is $6. What is the firm's cost of producing another unit of output using labor?
0.50$
If the own-wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by
10%
When a competitive firm hired nine workers, its profits were $100. When it hired 10 workers, its output was went from 9 to 11 units. Each unit of output sold for $10 while the wage of each worker was $12. What is the firm's new profit level?
108$
Workers in the Widget Industry YEAR EARNING CPI 1966 8,000$ 60 1976 15,000$ 100 1986 22,500$ 178 1996 30,000$ 205 According to Table 2.2, in which year were the real earnings of workers in the Widget Industry highest?
1976
Population: 260 million Employed: 130 million Unemployed: 10 million Retired: 35 million Under Age 16: 60 million Given the data in Table 2.1, the unemployment rate is
7.1%
It has been said that teaching assistants to professors are underpaid. Which of the following would be evidence (if true) that they are underpaid?
Professors have a hard time finding qualified teaching assistants
Which of the following events could explain why wages and employment could fall in a competitive labor market?
The demand curve shifts left and down
If Industry A can substitute capital for labor easily and Industry B can not, then (other things equal)
Industry A's own-wage elasticity of demand will be higher than Industry B's