LC11: LearningCurve - Ch. 11: The Labor Market
Your company's labor demand curve is the same thing as its _____ curve.
marginal revenue product
The _____ of supply of labor measures workers' responsiveness to changes in wages.
price elasticity
From the graph, the labor supply curve is vertical because
the income and substitution effects offset each other.
The income effect measures
how people's choices change when they have more income.
When the owner of a sushi restaurant hires a second cook, customers increase their orders from 70 to 110 orders per week. He pays each cook $500 per week and charges $15 per order. If he adds one more cook, he might get 30 extra orders per week. Should he hire a third cook? Why?
No, he can hire only two cooks to get the maximum profit of $650.
The marginal revenue product equals
the marginal product of labor multiplied by the price of that product.
From the graph, the labor supply curve is upward-sloping because:
the substitution effect dominates.
As an employer in a perfectly competitive labor market, you'll find that
there is a prevailing market wage you have to pay to hire workers.
The _____ advises that you should hire more workers if the marginal revenue product is greater than or equal to the price.
Rational Rule for Employers
Due to the substitution effect, higher wages provide a _____ incentive to work. Higher wages lead workers to _____ the demand for leisure due to the income effect.
greater; increase
Regarding the substitution effect, a higher wage _____ the returns to work relative to leisure, leading you to work _____.
increases; more
What does the downward-sloping labor demand curve represent in the graph of the wage of hair stylists below?
The decisions of hair salon owners
How do you describe a labor market in which many employers are competing to hire from a large pool of qualified workers with similar skills?
You describe the labor market as perfectly competitive.
In choosing a career path, you are likely to succeed when you choose
an occupation you have a lower opportunity cost in relative to other people
What does the upward-sloping supply curve represent in the graph of the price of books below?
The decisions of bookstore owners