ECON 003 Lecture 5: Chapter 4 Class Notes

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21 Mar 2019

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Chapter four: supply and demand - applications and extensions. Price for labor is called the wage (w) Quantity of labor is called employment (e) Works just like the market for goods, just with different names. Labor demand curve is downward sloping because as wage decreases, firms will want to employ more people. Labor supply curve is upward sloping because as wage increases, people will want to work more. Linking the labor market with the product market. There"s a close relationship between the demand for products + the demand for resources used to make them. Price floor : a legally established minimum price buyers must pay for a good or resource. Price floor above equilibrium price creates a surplus. Price floor below equilibrium price does nothing. Raising minimum wage increases excess labor supply. Price ceiling : a legally established maximum price sellers can charge for a good or resource. Price ceiling below market equilibrium price creates a shortage.

Related Questions

1) The minimum wage can be thought of as a price floor. The great majority of labor economists believe that a minimum wage __________ unemployment among young and unskilled workers.

increases

decreases

eliminates

has no effect on

There is not enough information to answer the question.

2) Of the following resources used to supply sidewalk food in New York City, which is the most expensive?

a) capital

b) land

c) enterpreneurial ability

d) labor

e) food

3) The demand for labor is likely to increase when

a) the supply of the good it produces falls

b) the demand for the good it produces rises

c) the supply of the good it produces rises

d) the demand for the good it produces falls

e) the real wage rate rises

4) If ten cases of spring water are sold at a price of $6 each in a perfectly competitive output market and the marginal product of the last unit of labor is 5, then the marginal revenue product of the last unit of labor is,

a) $60

b) $30

c) $50

d) $2

e) 60 cents

5) The price paid to a resource in totally fixed supply is called

a) economic rent

b) economic profit

c) wages

d) interest

e) opportunity cost

6) The demand for labor is likely to increase when

a) the supply of the good it produces falls

b) the demand for the good it produces rises

c) theh supply of the good it produces rises

d) the demand for the good it produces falls

e) the real wage rate rises

1.The market supply curve for labor is upward-sloping because

a) As the wage rises, most workers want to work fewer hours.

b) As the wage falls, most workers want to work more hours.

c) As the wage rises, most workers are willing to work more hours.

d) For most workers, as the wage rises, the preference for leisure time increases.

2. As marginal physical product diminishes, marginal revenue product

a) Also diminishes.

b) Is not affected.

c) Rises at a diminishing rate and eventually falls.

d) Rises.

3. For a minimum wage to have any impact on the labor market, it must be set at a level

a) Higher than the equilibrium wage

b) Higher than MPP.

c) Higher than MRP.

d) Consistent economic growth.

4. Because a union is a form of monopoly, it must be concerned about the _____ slope of the demand curve for labor.

a) Vertical

b) Horizontal

c) Downward

d) Upward

bluewater-buffalo592

1. The market supply curve for labor is upward-sloping because

a) As the wage rises, most workers want to work fewer hours.

b) As the wage falls, most workers want to work more hours.

c) As the wage rises, most workers are willing to work more hours.

d) For most workers, as the wage rises, the preference for leisure time increases.

2. As marginal physical product diminishes, marginal revenue product

a) Also diminishes.

b) Is not affected.

c) Rises at a diminishing rate and eventually falls.

d) Rises.

3. For a minimum wage to have any impact on the labor market, it must be set at a level

a) Higher than the equilibrium wage.

b) Higher than MPP.

c) Higher than MRP.

d) Consistent with economic growth.

4. Because a union is a form of monopoly, it must be concerned about the ________ slope of the demand curve for labor.

a) Vertical

b) Horizontal

c) Downward

d) Upward

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ECON 003 Lecture 5: Chapter 4 Class Notes

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