ECON 1B03 Chapter Notes - Chapter 18: Marginal Revenue, Demand Curve, Market Power

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25 Jun 2015

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ECON 1B03 Full Course Notes

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Only decides how many workers to hiere and how mayn apples to sell: assume that the firm is profit-maximizing. How the # of workers affects quanity of good: production function: the relationship between the quantity of inputs used to make a good and the quantity of output of that good. E. x. input = apple pickers, output = apples consider other inputs fixed for now: marginal product of labour: the increase in the amount of output from an additional unit of labour. As # of workers increases, mp of labour declines. Diminishing marginal product: the property whereby the marginal product of an input declines as the quantity of the input increases. Vmpl diminishes as the # of workers increases. A. k. a marginal revenue product-the extra revenue the firm gets from hiring an additional unit of a factor of production. When the output price changes, the vmp changes, therefore labour demand curve shifts.

Related Questions

17. All of the following can raise union member wages except:

a. limiting union membership over time

b. increasing the demand for non-union made goods

c. increasing the productivity of union workers

d. increasing the demand for union-made goods

12. If a firm wants to maximize its profits, it should

a. equates the marginal revenue product for each input to the price of the input

b.hire unskilled labour rather than skilled labour since unskilled labour is cheaper

c. hire lots of capital and very little labour since labour needs to be trained

d. equate the marginal physical product for each input to the price of the input

10. A profit-maximizing monopolist will hire labour up to the point where

a. marginal revenue equals than the wage rate.

b. marginal revenue product is greater than the wage rate.

c. marginal revenue equals the price of the product.

d. marginal revenue product is less than the wage rate.

9. The practice of outsourcing has been given a boost by:

a. firms that are becoming more risk-averse.

b. advances in telecommunications and computer networking.

c. support from organized labour.

d.sharp increases in the cost of overseas labour.

8. Suppose firms in an industry hire unskilled labour and skilled labour. unskilled labour is a substitute for capital and skilled labour is a complement with capital. A decrease in the real price of capital would:

a. cause the demand for unskilled labour to increase and the demand for skilled labour to decrease. the wage of unskilled labour would rise relative to the wage of skilled labour

b. cause the demand for both kinds of labour to decrease. wages rates of both kinds of labour would decrease too.

c. cause the demand for labour to increase, raising wages of both skilled and unskilled labour.

d. cause the demand for unskilled labour to decrease and the demand for skilled labour to increase. the wage of unskilled labour would decrease relative to the wage of skilled labour.

emeraldsardine618

1. Marginal resource cost is

A) the increase in total resource cost associated with the production of one more unit of output.

B) the increase in total resource cost associated with the hire of one more unit of the resource.

C) total resource cost divided by the number of inputs employed.

D) the change in total revenue associated with the employment of one more unit of the resource.

2. Which of the following increases in labour demand is due to a change in the price of a related resource?

A) Software sales rise, thus increasing the demand for software developers.

B) Snowboarding increases in popularity, thus increasing the demand for the workers who make snowboards.

C) A decrease in the price of wood decreases the cost of furniture, thus increasing the demand for furniture workers.

D) A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers.

3 The labour demand curve of a firm

A) will shift to the left if the price of the product the labour is producing falls.

B) is perfectly elastic if the firm is selling its product in a purely competitive market.

C) reflects a direct relationship between the number of workers hired and the money wage rate.

D) is the same as its marginal product curve.

beigealligator720

If labor productivity increases,

Question 8 options:

the demand for labor increases.

labor costs rise by equal increments.

jobs will relocate.

some workers will be laid off.

In labor markets, the substitution effect occurs when

Question 10 options:

a change in the price of a substitute input reduces the cost of capital.

a change in the price of a substitute input causes the demand for labor to change in the same direction.

a substitute good also functions as a compliment.

the cost of production falls enough that the firm will produce a larger amount of output.

The demand for labor is

Question 6 options:

	derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money.
	totally unrelated to the demand curve for the final product.
	derived from the demand for the final product being produced.
	derived from a utility-maximizing process similar to that used to derive the demand curve for goods and services.

blueleopard622

ECON 1B03 Chapter Notes - Chapter 18: Marginal Revenue, Demand Curve, Market Power

ECON 1B03 Full Course Notes

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