šŸ·ļø LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION ā†’
Log in
HomeTextbook Notes300,000CA170,000

EC120 Chapter Notes - Chapter 18: Marginal Product, W. M. Keck Observatory, Market Power

27 views4 pages
graymacaw753
24 Nov 2014
School
WLU
Department
Economics
Course
EC120
Professor
Houman Mortazavi

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

carminegrasshopper545 and 38337 others unlocked
EC120 Full Course Notes
30
EC120 Full Course Notes
Verified Note
30 documents

Document Summary

Chapter 18 the markets for the factors of production. The supply and demand for labour, land, and capital determine the prices paid to worker, landowners, and capital owners: factors of production the inputs used to produce goods and services. Labour, land, and capital: the demand for a factor of production is derived demand, derived demand a firm"s demand for a factor of production is derived from its decision to supply a good in another market. The demand for labour: the competitive, profit-maximizing firm. Our firm is competitive both in the market for apple (firm as a seller) and in the market for apple pickers (firm as a buyer). The firm"s supply and demand for workers are derived from its primary goal of maximizing profit: the production function and the marginal product of labour. Economists use the term production function to describe the relationship between the quantity of the inputs used in production and the quantity of output from production.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

EC120 Chapter 18: Chapter 18 EC120.docx
plumbeaver231
EC120 Chapter Notes - Chapter 18: Opportunity Cost, Marginal Revenue Productivity Theory Of Wages, Marginal Product
coralwoodchuck884
EC120 Lecture Notes - Lecture 23: Marginal Product, Production Function, Opportunity Cost
cerisegiraffe538

Related Questions

If labor productivity increases,

Question 8 options:

Ā 

the demand for labor increases.
Ā 

labor costs rise by equal increments.
Ā 

jobs will relocate.
Ā 

some workers will be laid off.

In labor markets, the substitution effect occurs when

Question 10 options:

Ā 

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

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

a substitute good also functions as a compliment.
Ā 

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

The demand for labor is

Question 6 options:

Ā 

derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money.
Ā 

totally unrelated to the demand curve for the final product.
Ā 

derived from the demand for the final product being produced.
Ā 

derived from a utility-maximizing process similar to that used to derive the demand curve for goods and services.

What is the consequence of a firm in a competitive marketselling a homogenous product?

Ā  The firms capture some market power.
Ā  The product sold by one firm is a perfect substitute for theproducts sold by other firms in the same industry.
Ā  All the firms in the industry are the same size.
Ā  The product sold by one firm is a perfect complement for theproducts sold by other firms in the industry.
Ā  Firms in the industry can produce the same product with adifferent quantity of inputs.

The accompanying table represents the quantity produced, thetotal revenue, and the total cost of a firm operating in aperfectly competitive market. Refer to this table to answer thefollowing questions.

Quantity Total Revenue Total Cost
0 $0 $3
1 $5 $5
2 $10 $9
3 $15 $13
4 $20 $19
Ā  Ā  Ā 



Profits are maximized when producing _______ unit(s).

Ā  4
Ā  2
Ā  3
Ā  1
Ā  0 (zero)

If firms in a competitive market are making positive economicprofits, the long-run market supply curve

Ā  shifts upward.
Ā  is above the point where the short-run market supply curve andthe demand curve intersect.
Ā  and the short-run market supply curve and the demand curve allintersect at the same point.
Ā  shifts downward.
Ā  is below the point where the short-run market supply curve andthe demand curve intersect.
Select correct option:
Substitution effect
Real income effect
Income effect
Price effect


If the cost of computer components falls, then
Select correct option:
The demand curve for computers shifts to the right.
The demand curve for computers shifts to the left.
The supply curve for computers shifts to the right
The supply curve for computers shifts to the left


The short run, as economists use the phrase, ischaracterisedby:
Select correct option:
All inputs being variable.
At least one fixed factor of production and firms neitherleavingnor entering the industry.
No variable inputs - that is, all of the factors of productionarefixed.
A period where the law of diminishing returns does not hold.


When an industry's raw material costs increase, otherthingsremaining the same:
Select correct option:
The supply curve shifts to the left.
The supply curve shifts to the right.
Output increases regardless of the market price and the supplycurveshifts upward.
Output decreases and the market price also decrease.


The law of diminishing returns assumes:
Select correct option:
There are no fixed factors of production.
There are no variable factors of production.
Utility is maximised when marginal product falls.
Some factors of production are fixed.


Price floor results in:
Select correct option:
Equilibrium
Excess demand
Excess supply
All of the given options


If a decrease in price increases total revenue:
Select correct option:
Demand is elastic
Demand is inelastic
Supply is elastic
Supply is inelastic


If the income elasticity of demand is 1/2, the good is:
Select correct option:
A luxury.
A normal good (but not a luxury).
An inferior good.
A Giffen good.


Other things equal, expected income can be used as a directmeasureof well-being:
Select correct option:
No matter what a person's preference to risk.
If and only if individuals are not risk-loving.
If and only if individuals are risk averse.
If and only if individuals are risk neutral.


When drawing demand and supply curves, economists are assumingthatthe primary influence on production and purchasingdecisionsis:
Select correct option:
Price
Cost of production
The overall state of the economy
Consumer incomes