14.1-14.2

suppose supply of land is infinitely inelastic and the demand for land is downward sloping but inelastic at the current equilibrium.if the supply curve shifts rightward (eq previously unusable land is cleared for production) what happens to the aggregate economic rents in this market?

decrease

suppose supply of farmland is infinitely inelastic and the demand for land is downward sloping but inelastic at the current equilibrium. if the supply curve shifts leftward (g farmland is permanently converted to other users) what happens to aggregate economic rents in this market?

increase

under an upward sloping supply curve for land, the economic rents to land ____ as the demand for land shifts rightward

increase

the acme company is a perfect competitor in its input markets and its output market. its average product of labor is 30, the MRPL is 20, the price of labor is 20, and the price of the output is 5. for acme company, the MRPL is

100 $

figure of backward bending supply of labor curve. which effect prevails int he backward bending portion of the supply curve

the income effect

if an individuals labor supply curve is backward bending, then

the income effect associated with a higher wage is greater than the substitution effect

1. under profit maximization, the q of labor used in production is optimal if MR= w/MPL 2. the expression MR=w/MPL implies that the revenue earned from the last unit of output produced equals the marginal cost of the last unit of output

1 and 2 are true

suppose labor and capital variable inputs. wage rate is 20, marginal product of labor is 30 units, the rental rate of capital is 100 per machine per hour, and the marginal product of capital is 150 units. if wage rate declines to $15 per hour, the firm employs more labor and the marginal product of labor declines to 20 units. assuming the rental rate of capital reminds the same, what is the marginal product of capital at the new optimal level of input usage?

133 units

uppose the local market for legal services has an upward sloping supply curve, PL = 150+ .0001 Q L where PL is the price of legal services and QL is the number of hours of legal services. if the equilibrium price of legal services is 250$ and the avg number of hours that ta lawyer works per year is 2500, what is average economic rent earned per lawyer in this market ?

20,000 $

suppose the local market for legal services has an upward sloping supply curve, PL = 150+ .0001 Q L where PL is the price of legal services and QL is the number of hours of legal services. if the equilibrium price of legal services is 250$ , what is the aggregate economic rent earned by lawyers int his market?

50,000,000 $

let p be the output price for a particular good. why is the value P*MPL greater than MRPL for a monopolist?

B. monopolist hires less labor C. monopolist sets a price that is higher than MR B and C correct

an outward sift in marginal revenue product curve is caused by (demand curve with variable capital)

a decrease in the wage rate

suppose a firm has one variable input, labor. why is the MRPL curve for a competitive firm above the MRPL curve for a monopolist?

although the MRPL may be the same under both market structures, the marginal revenue of the monopoly declines with output

an increase in technology that enhances labor productivity will likely result in

an increase in labor employment and an increase in wage rate

a firm purchases a factor of production in a competitive market. at the current purchase rate, the MRP of the factor is greater than the marginal expenditure for the factor. thus, the firm

can increase profit by expanding the employment of the factor of production

the acme company is a perfect competitor in its input markets and a monopolist in. its output market. its average product of labor is 30, the MRPL is 20, the price of labor is 20, and the price of the output is 5. for acme company, the MRPL ..

cannot be determined with this info

the MRPL for acme is 15. the average product of labor is 25, and the price of labor is 10. assuming that acme is a competitor in its output and input markets, the marginal revenue product of labor is ..

cant be determined with the info provided

when the factor market is purely competitive, the firms avg expenditure for an input and the avg expenditure always equal? where there is a competitive..

competitive buyer

firefighters are highly skilled workers who are typically employed by city governments. if a city reduces the wage rate paid to firefighters to be less than the equilibrium wage rate, what happens to the economic rents earned by the firefighters?

decrease

what can account for the negative slope of the MRP curve

diminishing marginal returns

the acme company is a perfect competitor in its input markets and its output market. its average product of labor is at its maximum and equals 30. the marginal revenue product of labor is $300. the price of its output is ..

$10

the marginal revenue product of labor is equal to

MP L * MR

in the competitive output market for a good Q, what is the MRP curve for an input X

MP x * P q

if the market for labor is perfectly competitive, the profit maximizing level of labor occurs where

MRP L = W

MP L = 24L ^(-1/2) for firm producing green chalk. P of green chalk is $1 per unit. Suppose the firm is a competitor in the labor market. The wage rate is $12. What is the MRPL? How much labor will be hired to max profit?

MRPL: 24L^(-1/2) 4 units of labor to max profit

suppose a competitive industry produces output Q, using input I, where the price of the output is Pq and the input price is Pi . efficient use of resources requires that

MRPi = Pi.

all of the payment to a factor of production will be economic rent when the factor of production has

an infinitely inelastic SUPPLY curve

electric power utility companies use various fuel sources (coal, natural gas, nuclear) to generate electricity for their customers. what happens to the demand for natural gas used to generate electricity as we move from a short run planning horizon to a long run planning horizon? why?

demand becomes more elastic over time bc the POWER COMPANIES have MORE OPTIONS available

labor is typically assumed to be the only variable input in very short run production systems, and the number of variable inputs increases as we lengthen our planning horizon from short run to long run what happens to the labor demand curve as we move from short to long run? demand curve becomes more..

demand curve becomes more elastic

under an infinitely inelastic supply of land, the economic rents to land ___ if the price of land doubles

double

suppose the labor market is perfectly competitive,but the output market is not. wen the labor market is in equilibrium, the wage will

equal the MRPL

suppose the labor market and all output markets are perfectly competitive. when the labor market is in equilibrium, the wage will

equal the marginal revenue product of labor

in a competitive labor market, with one variable factor, the supply of labor to the firm is equal to

equal to the marginal expenditure curve

a firm should hire more labor when the marginal revenue product of labor ____ the wage rate

exceeds the wage rate

assume as wage rate rises, a workers substitution effect for leisure is larger than the income effect. we can conclude that in this region, thee works labor supply curve will..

have the usual upward slope

the industry demand curve for labor is the

horizontal sum of individual firm labor demand curves

the substitution effect of a decrease in the wage will

increase leisure, regardless of whether leisure is a normal or inferior good

If leisure is a normal good, then the income effect of a decrease in wage will

increase the number of hours worked

suppose labor and capital variable inputs. wage rate is 20, marginal product of labor is 30 units, the rental rate of capital is 100 per machine per hour, and the marginal product of capital is 150 units. if wage rate declines to $15 per hour, the firm employs more labor and the marginal product of labor declines to 20 units. assuming the rental rate of capital reminds the same, what happens to the amount of capital used by the firm?

increases

marginal revenue product can be expressed as the

increment to revenue received from one additional unit of input hired

under what circumstances will the economic rent earned by a factor of production always be zero ?

infinitely elastic supply curve

which is not true about the supply of labor to the firm in a competitive labor market?

it is upward sloping (not true)

what happens to the marginal revenue product curve of a factor as more of a complementary factor is hired?

it shifts to the RIGHT, because marginal product INCREASES

the acme company is perfect competitor in its input markets and monopolist in its output market. the MRPL is 20 and the price of acmes output is 10. for acme company, the MRPL is

less than 200 $

other things being equal, the MRP curve for a competitive seller

lies above the MRP curve for a monopolist

in general, does demand for labor become more or less elastic as we increase the number of other variable inputs used in a production process?

more elastic

when compared to the demand curve for only one variable input, the demand curve for a factor input when several inputs are variable is

more elastic

assume labor and capital are complements in production and wage declines. which of the following statements best describes the adjustment in the use of labor?

more labor is used both because of the reduced wage and increased use of capital

if only one firm industry could take advantage of a reduced wage and all other firms continue paying the old wage, how could one best describe the one firm's reaction to this reduced wage assuming labor is the only variable input? the marginal revenue product of labor curve would...

remain unchanged

if the firms in an industry could take advantage of a reduced wage, how would one best describe the firms' demand for labor? the MRP L schedule would

remain unchanged . firms would hire more labor at lower wage

suppose supply and demand of land for natural gas extraction are imperfectly elastic. given that coal is a potential substitute for natural gas in energy applications, a change in the price of coal may shift the demand curve for natural gas. what happens to the economic rents assigned to land on which natural gas is extracted if the price of coal declines?

rents decrease