ECON1002 Lecture Notes - Lecture 3: Output Gap, Reservation Price, Business Cycle

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browngrasshopper715

13 Aug 2018

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Labour is represented by the letter (l). A workers maximum wage will be the maximum bene t the worker brings to the. The maximum a worker will be paid is the marginal revenue (mr) per unit of labour (pl) which equals marginal product (mp) times productivity (p). Therefore wage (w) equals marginal revenue (mr) times per unit of labour (pl). If the marginal product of labour (mpl) is higher i will be prepared to pay workers more. Shifts along the demand curve for labour: changes in real wages (w/p). Shifts of the demand curve for labour: change in worker productivity (mpl). If there is an increase in mpl then the demand curve shifts right. If there is a decrease in mpl then the demand curve shifts left. Sup[ply of labour increases as thew real wage goes up: reservation price of labour is the minimum required to get people to turn, upward sloping curve.

Related Questions

1. Which of the following is characteristic of the marginal revenue product schedule for a resource?

a. It approximates the firm's demand curve for the resource.

b. It measures the change in total revenue resulting from employing an additional unit of the resource.

c. It is determined by multiplying the marginal product of the resource by the marginal revenue of the good produced.

d. All of these are true.

2. Assume Ajax Company employs 100 workers and the total revenue is $400,000 per week. When Ajax Company employs 101 workers, the total revenue is $405,000. The marginal revenue product of the 101st worker is:

a. $40,000.

b. $5,000.

c. $405,000.

d. none of these.

3. The optimal number of workers to be hired by a firm operating in a competitive labour market is where:

a. P = MRP.

b. MP = MRP.

c. MRP = w.

d. P = w.

cerisecoyote480

1. The addition to the revenue obtained from firing an additional unit of labour is:

a. marginal revenue product

b. marginal physical product of labour

c.total product

d. marginal factor cost

2. The firm's demand curve for labour is:

a. the demand curve for the good produced divided by the price of the good

b.the marginal revenue product curve for labour

c.the marginal physical product curve for labour divided by the good

d. the marginal physical product curve for labour multiplied by the price of labour

3. If the price of the product is $1.50 and the marginal factor cost of an additional unit of input is $105, how many units of labour should be hired?

Labor input (workers/day)_______________________________-total physical product (output/day)

10 __________________________________________________500

11__________________________________________________600

12__________________________________________________690

13___________________________________________________760

14___________________________________________________800

a. 14

b.12

c.13

d.11

4. the price elasticity of demand for labour equals

a. the change in quantity demanded of labour divided by the change in the price of labour

b. the slope of the demand curve for labour

c. the percentage change in the price of labour divided by the percentage change in the supply of labour

d. the per cent change in the quantity demanded of labour divided by the percentage change in the price of labour

5. We would expect that a rise in labour supply will have a proportionately larger effect on the market wage rate when:

a. the supply for labour is elastic

b.the demand for labour is unitary elastic

c.the demand for labour is elastic

d.the demand for labour is inelastic

orangerhinoceros668

1. In a perfectly competitive industry, an individual firm faces:

a. a perfectly elastic labour supply curve

b. a perfectly inelastic labour supply curve

c.a perfectly vertical labour supply curve

d.none of the above

2. A firm purchases more capital equipment. We would expect to observe:

a. an increase in the supply of labour for this firm

b. a decrease in the supply curve of labour for this firm

c.an increase in the wage rate paid for labour by this firm

d.an increase in the demand for labour by this firm

3. Which of the following would be h most likely outcome if all perfectly competitive firms in a product market join together to form a monopoly?

a. the rate of output in the market will increase but the quantity of labour input will decrease

b.both the rate of output and the quantity of labour input employed will increase

c.the rate of output in the market will decrease but the quantity of labour input will increase

d.both the rate of output and the quantity of labour input employed will decrease

4. what does the marginal revenue product equal when 28 workers are hired in one week?

Labor input (workers per week)__Marginal physical product (output per week)__marginal revenue

25_______________________150_________________________________9.00

26_______________________140_________________________________8.50

27_______________________130_________________________________8.00

28_______________________120_________________________________7.50

29_______________________110________________________________7.00

a. $210

b.$7.50

c.$900

d.$1040

5. The profit-maximizing firm will hire additional workers until:

a. the extra revenue by the last workers hired equals zero

b.the extra cost associated with hiring the last worker equals the price of goods produced

c.the additional cost associated with hiring the last worker equals the average wage rate of workers

d.the additional cost associated with hiring the last worker equals the additional revenue generated by that worker.

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ECON1002 Lecture Notes - Lecture 3: Output Gap, Reservation Price, Business Cycle

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