Economics 🧵

The marginal revenue product of labor is the

(B) additional revenue a firm earns when it employs an additional unit of labor

Assume that a profit-maximizing, perfectly competitive firm hires labor in a perfectly competitive labor market. If the market wage is $12 per hour and the price of the product is $3 per unit, the firm will

(B) hire another worker if the output per hour of the additional worker exceeds 4 units

According to the information in the table above, the twelfth worker would increase the hourly profit by

(C) $1.30

This table shows the short-run output for a perfectly competitive firm. If the price of the product is $10, what is the marginal revenue product of the third worker hired?

(C) $40

A firm's demand curve for labor is equal to a segment of its

(D) marginal revenue product curve

If the price for a product produced in a competitive market increases, which of the following is most likely to occur in the labor market for workers who produce that product?

(A) The demand for labor and the number of workers hired both increase.

Economists argue that most professional athletes earn economic rent because they

(C) earn far more as professional athletes than they could earn in their next-best occupation

The marginal physical product of the second worker is

(A) 19

The monopsonist's marginal factor (resource) cost curve for labor is

(B) above the labor supply curve because to hire more workers the firm must raise the wage for all workers

A profit-maximizing firm will continue to hire workers until the

(A) marginal factor cost of labor is equal to the marginal revenue product of labor

The concept of derived demand is described by which of the following?

(A) A decrease in the demand for theater tickets will decrease the demand for actresses and actors.

A perfectly competitive firm hires three workers in a perfectly competitive labor market. The marginal products of the three workers are shown in this table. Which of the following will be true?

(A) Each worker will receive a wage based on the marginal product of the last worker hired.

Suppose that people who work in the paint industry face a great risk of developing an incurable disease. A medical breakthrough that eliminates the risk will most likely cause which of the following shifts in the supply and demand curves for workers in the paint industry?

(A) Supply Curve = Shift Right ; Demand Curve = No Shift

When the demand for new homes decreases, the demand for construction workers who build homes decreases. This relationship illustrates the concept of

(A) derived demand

If a large number of unskilled workers enter the labor market, which of the following is most likely to occur in the labor market for unskilled workers?

(A) The supply curve will shift to the right and the wage rate will decrease.

Which of the following is most likely to cause the demand curve for nurses to shift to the right?

(C) An increase in the number of hospitals that employ nurses

Assume that the government imposes an effective minimum wage in a perfectly competitive labor market. What will happen to employment and total wage payments?

(C) Employment = Decrease ; Total Wage Payments = Indeterminate

Marginal resource (factor) cost can be defined as

(C) the change in total resource cost caused by the addition of one more unit of a resource

In a perfectly competitive labor market, an increase in an effective minimum wage will result in

(E) fewer workers being hired

If a firm employs only labor and capital in its production process, which of the following best describes the optimal combination of inputs for the firm in the long run?

(A) The marginal product per dollar spent on labor is equal to the marginal product per dollar spent on capital.

Suppose that a large number of unskilled workers enter a nation's labor market. If the labor market is competitive, the number of unskilled workers hired and the wage rate will most likely change in which of the following ways?

(B) Number of Unskilled Workers Hired = Increase ; Wage Rate = Decrease

In the current labor market, suppose that the wage rate for accountants is significantly higher than the wage rate for economists. In the long run, if you observed that the wage rate for economists rose while the wage rate for accountants fell, which of the following would best explain your observation?

(B) The supply of economists must have decreased, and the supply of accountants must have increased.

In a monopsonistic labor market, a firm will continue to hire workers until the marginal revenue product of labor

(B) equals marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market

In a perfectly competitive free market economy, a wage gap between two workers can be explained by differences in all of the following EXCEPT their

(E) tastes for luxury goods

A firm is currently employing a cost-minimizing combination of labor and capital for a given level of output. The firm is employing 20 workers, and the marginal product of the last worker is 40 units of output. The firm is employing 100 units of capital, and the marginal product of the last unit of capital is 10 units of output. If the wage rate is $20 per hour, what is the price of capital?

(B) $5 per hour

Which of the following is likely to shift an industry's labor supply curve to the left?

(D) An increase in preference for leisure

Which of the following would cause the wage for computer programmers to increase?

(B) An improvement in the education of computer programmers

A profit-maximizing firm that sells its output in a perfectly competitive market hires two additional workers, calculating that the contribution to total revenue of the last worker hired just equals the extra cost of hiring that worker. Six months later, the firm finds that the last worker's contribution to total revenue is less than the extra cost of hiring that worker. Which of the following may have occurred in the interim to explain this change?

(C) The market demand for the firm's product decreased.

Let W denote the nominal wage, P the output price, and MPL the marginal product of labor. Which of the following relationships correctly estimates the marginal cost (MC) of production for a perfectly competitive firm in the short run?

(D) MC = W/MPL

This graph shows the marginal revenue product (MRP) and the market wage rate for a profit-maximizing firm. Which of the following is true of the firm's hiring of labor?

(E) It should hire 90 workers.

An individual's labor supply curve is derived from that person's preferences about the tradeoff between income and

(E) leisure

Assume that labor and capital are the only two inputs a perfectly competitive firm uses to produce wheat. The firm hires its inputs in perfectly competitive input markets. The unit price of labor is $8 and of capital is $20. When the firm employs the profit-maximizing combination of these two inputs, the marginal product of labor is 2 tons of wheat and of capital is 5 tons of wheat. The price of wheat per ton must be

(B) $4

The marginal product of labor is constant at 1 unit for every additional unit of labor. The monopolist hires labor in a perfectly competitive market at the wage rate of $5 per hour. Based on the table and info above, what is the marginal revenue product of labor when the firm produces the third unit of output?

(B) $7

Firm XYZ produces and sells corn in a perfectly competitive market and hires its workers in a perfectly competitive labor market. Which of the following best describes the demand curve for XYZ's corn and XYZ's demand curve for labor?

(B) Demand for XYZ's Corn = Horizontal ; XYZ's Labor Demand = Downward Sloping

If the government eliminates an effective minimum wage in a competitive labor market, which of the following is true?

(B) Minimum wage workers will experience a decrease in hourly pay.

Hope Hospital is a monopsonistic employer of nurses. The marginal revenue product of nursing services, the marginal factor (resource) cost of nursing services, and the market supply curve of nursing services are depicted in this figure by MRP, MFC, and S, respectively. What wage-quantity combination does Hope Hospital choose in order to maximize its profits?

(B) W1 and Q3

Based on this table for a perfectly competitive firm, if the wage rate for labor is $15, how many units of labor should the firm hire?

(C) 4

The marginal product of labor is constant at 1 unit for every additional unit of labor. The monopolist hires labor in a perfectly competitive market at the wage rate of $5 per hour. Based on the table and info above, how many units of labor should the firm employ to maximize profits?

(C) 4

This graph shows the conditions that a monopsonist faces in a labor market. How many workers would this monopsonist hire and what wage rate would it pay?

(C) Number of Workers = 10 ; Wage Rate = $20

The graph above illustrates the labor market for teenage workers. The current minimum wage for all workers is W1. If Congress introduces a sub-minimum wage, W2 that applies only to teenagers, what is the most likely effect on teenage employment?

(A) Teenage employment will increase because firms will want to hire more teenagers at W2 than at W1.

Assume that firms sell their output in a perfectly competitive product market and hire labor in a perfectly competitive labor market. If all other factors remain constant, an increase in the demand for the firms' product will result in which of the following changes in the labor market?

(C) The demand curve for labor will shift to the right.

Assume that both the product and labor markets are perfectly competitive. It would be profitable for a firm to hire additional labor if the ratio of the wage to the marginal product of labor is

(A) less than the output price

Assume labor and capital are substitute inputs. A manufacturer will employ more labor if

(C) the price of capital increases

A factor of production will NOT earn economic rent when its supply is

(D) perfectly elastic

Which of the following tends to increase the gap in earnings between skilled and unskilled workers over time?

(C) A decrease in the demand for unskilled workers relative to skilled workers

This table describes the production function of an auto parts manufacturer. Assume that the firm can hire as many workers as it wants at the market wage rate of $600 per week per worker and sell as many auto parts as it wants at the price of $10 per part. To maximize profits, the firm should hire

(D) 5 workers

The last worker currently employed by a firm has a marginal product of 3 units per hour and is paid $20 per hour. Assuming that both the labor market and product market are perfectly competitive and that the product's price is $5 per unit, the firm should do which of the following?

(D) Employ fewer workers

Businesses employ workers from city neighborhoods and rural areas. These workers are perfect substitutes and cannot relocate in the short run. The government offers businesses a wage subsidy if they hire workers from city neighborhoods. What is the effect of the subsidy on the wage rate of rural workers and on the total hours they work?

(D) Wage Rate of Rural Workers = Decrease ; Total Hours Worked by Rural Workers = Decrease

An increase in the effective minimum wage will have less of an impact on employment if the demand for labor is

(D) relatively inelastic

A firm sells its output in a perfectly competitive market and hires two inputs, capital and labor, in perfectly competitive factor markets. The product price is $15 per unit, the wage is $75 per day, and the marginal product of capital is 3. If the firm is choosing the least-cost combination of labor and capital, the firm's marginal product of labor and the price of capital must be equal to which of the following?

(E) Marginal Product of Labor = 5 ; Price of Capital = $45

If a competitive firm pays its workers the value of the marginal product of the last worker hired, which of the following is true?

(E) The contribution of the last worker hired to the firm's profit will be zero.

For a competitive labor market, an increase in which of the following will lead to an increase in the demand for labor?

(E) The demand for the good that labor produces

Given this information, which of the following is true for a firm buying its labor and capital inputs in a perfectly competitive market?

(E) The firm can reduce the cost of its current level of output by laying off workers and employing more capital.

As the population of a country ages, the demand for health care is projected to increase. As a result, the health care industry is likely to experience all of the following EXCEPT

(E) a decrease in the prices of medicine