Chapter 11 - Labor Markets
Bond yield is equal to
Annual income paid on a bond divided by the market value of that bond
The income effect of wages refers to the fact that
As income rises, individuals will be willing to work less
A decrease in the marginal product/marginal physical product of labor would be represented by a...
Decrease (shift) in labor demand.
The substitution effect of wages refers to the fact that
Higher wage rates encourage people to work more
Labor unions generally lobby for
Increased tariffs on the goods they make
MRP = ______________
MPP x P(x)
The optimal hiring rule is to employ labor up to the point where wage = _______.
MRP
A monopoly is a sole ________, and a monopsonist is a sole ___________.
Seller in a product market; buyer in a labor market
Definition of a worker's MRP
The change in the firm's total revenue as the result of hiring an additional worker
A monopsonist can pick the _________, while a monopolist can pick the _________.
The wage it will pay; the price it will charge
the demand for a factor of production depends on the...
demand for the products that it helps to produce.
An increase in the demand for new houses leads to an increase in the demand for construction workers is an example of ______________.
derived demand
A monopsony will
employ a quantity of labor where the marginal revenue product equals the marginal factor cost. A monopsony is a single buyer
If the wage rate is fixed at a certain level, the labor supply curve is...
horizontal (elastic).
compared to a competitive input market, a monopsonist will hire
less and pay a lower input price
Given the same marginal revenue product and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be
less than that in a competitive labor market
Firms should hire additional units of a resource as long as the...
marginal revenue of product of the resource exceeds the cost of an additional unit of the resource.
If the price of labor falls (decreased wage rate), we can expect...
quantity demanded of labor will increase
Suppose a change in technology increases the marginal product of labor. The result is a...
rightward shift in the demand for labor curve
A union may attempt to obtain stricter certification requirements or longer apprenticeships. These changes would raise workers' wages because they...
shift the labor supply curve leftward
What happens to the MPP of labor when the market price of the good produced increases?
stays the same
A lower Price to Earnings ratio is an indication that
the company's financial health is strong
