ECON 1 Lecture 20: Econ_1_-_Lecture_20

10 views2 pages

amaranthmammoth871

21 May 2020

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Quantity demand decreases by wage (increases wage, quantity demand decreases) Demand is determined by the value of the marginal product of labor. any event that changes the value of the marginal product changes demand. 2 major determinants of demand are: technology ( increase mp), output prices (increases the vmp), the third is the supply of other factors. While higher wages generally increase the quantity of labor supplied, this is not always true. A higher wage increases the benefit of an additional hour of work, but it also, less obviously, increases the opportunity costs of working. If wage increases, opportunity cost of leisure increases. there are 2 opposing effects that determines whether the labor supplied increases or decreases. Price effect (pe): increase in labor supply in response to a higher wage. Income effect (ie): decrease in labor supply due to greater demand for leisure caused by a higher income.

Related Questions

(1)

Which of the following employment situations would most closely approximate a monopsony?

	a steel mill in Yokahama, Japan.
	a fast food restaurant in a big city.
	a farmer hiring seasonal workers.
	a large factory in a small town.

(2)

If a monopsonist hires labor, it will choose to hire that quantity at which ___________ and pay a wage rate that is _______________.

	MR = MC; equal to the MRP curve.
	the supply curve intersect the MRP; less than MFC
	MRP = MFC; less than MRP
	the supply curve intersect the MRP; equal to MRP

(3)

Suppose a firm employs both labor and capital. If the ratio of marginal product to price of labor is 50/$10 and the ratio of marginal product of capital to price of capital is 60/$12, the firm should

	maintain the current combination capital and labor.
	buy more labor and less capital because labor is cheaper.
	buy more capital and less labor because capital is cheaper.
	buy more capital because it is more productive than labor.

(4)

Derived demand for labor means that when a firm hires labor, it has to derive its demand

	mathematically.
	based on the labor supply.
	from the demand for the product that the labor produces.
	based on the minimum wage.

(5)

For a firm in perfect competition, the value of the marginal product is

	the value of an additional unit of output measured in terms of additional cost.
	the total value of the total output output divided by the total output.
	additional revenue minus additional cost as a result of an increase in output.
	the price of the product multiplied by the additional output resulting from an additional unit employed.

(6)

A firm that is perfectly competitive will hire labor as long as which of the following is true?

	VMP < W.
	VMP > W.
	MC > MR.
	VMP < MRP.

(7)

The VMP curve slopes downward at some point because

	congestion in the work place lowers marginal product.
	teamwork in the work place increases marginal product.
	the firm hires less labor as the wage rate rises.
	labor supplies less amounts of labor as the wage rate falls.

(8)

Which of the following would not be considered capital in a business?

	The employees
	The factory
	A machine
	Tools

(9)

The increase in the value of a firmâs capital as it increases in age and use is depreciation.

	true
	false

(10)

On a labor market graph, a firmâs demand for labor is

	the wage rate.
	the marginal revenue product curve.
	the marginal product curve.
	indeterminant.

(11)

Why may a householdâs labor supply curve bend backwards at some wage rate?

	The household substitutes labor for leisure.
	The household substitutes leisure for labor.
	Employers demand fewer employees at higher wage rates.
	Households want to supply more labor as the wage rate decreases to maintain incomes.

(12)

The substitution effect is usually stronger than the income effect, thus creating an upward sloping labor supply curve.

	true
	false

(13)

An inelastic demand for labor means that an increase in the wage rate causes a less than proportionate decrease in the quantity of labor demanded.

	true
	false

(14)

Marginal revenue product is

	marginal revenue divided by marginal product.
	marginal revenue times marginal product.
	marginal product minus marginal revenue.
	marginal product plus marginal revenue.

(15)

A firm obeys the least-cost rule by equating the ratios of ___________________ to the ________________ price.

	marginal product; product
	marginal product; factor
	marginal cost; product
	marginal revenue; product

(16)

Suppose the MP of the last unit of capital hired equals 12 and the MP of the last unit of labor hired equals 16.If the price of capital is $8 per unit and the price of labor is $8 per unit, then the firm

	is maximizing its costs with this combination of factors.
	is maximizing its profits with this combination of factors.
	should hire more labor and less capital in order to minimize its costs.
	should hire more capital and less labor in order to minimize its costs.

(17)

For a firm to minimize its costs with more than one factor of production, for every factor, the ratio of the

	marginal product to factor price must be equal.
	marginal revenue product to factor price must be equal.
	marginal revenue product to output must be equal.
	marginal cost to factor price must be equal.

(18)

A monopsony is a firm that, in a specific market, is the only

	seller of a product.
	buyer of a product.
	seller of a factor of production.
	buyer of a factor of production.

(19)

Which of the following businesses would most closely approximate a monopsonist?

	A steel mill in Pittsburgh
	A fast food franchise in a large city
	A large manufacturer in a rural county
	A rancher who hires ranch help

(20)

A firm has the opportunity to buy a machine that costs $2500. It has found the present value of the income generated by the machine to be $2487. It should purchase the machine.

	true
	false

(21)

An increase in the market rate of interest causes

	a leftward shift in the demand for capital curve.
	a rightward shift in the demand for capital curve.
	a movement up the demand for capital curve.
	a movement down the demand for capital curve.

(22)

The characteristic of capital that makes it different from labor is its

	high cost.
	durability.
	rotunda.
	relatively low cost compared to labor.

(23)

The present value of $1000 one year in the future at a 10 percent interest rate is approximately

	$870.
	$909.
	$1000.
	$1909.

coffeemouse295

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

lavendergrasshopper392

ECON 1 Lecture 20: Econ_1_-_Lecture_20

Document Summary

Get access

Related Documents

ECON 1 Lecture Notes - Lecture 6: Demand Curve, Reservation Price, Marginal Cost

ECON 1 Lecture Notes - Lecture 18: Marginal Product, Production Function, Marginal Utility

ECON 1 Chapter Notes - Chapter 1: East Los Angeles College, Ceteris Paribus, Deflation

Related Questions