ECON 101 Chapter Notes - Chapter 13: Marginal Revenue Productivity Theory Of Wages, Marginal Revenue, Demand Curve

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Labor market: wages and employment are determined by the intersection of the downward-sloping labor demand curve and the upward-sloping labor supply curve. Wages are determined in the market by the interaction of all of the businesses that could hire workers with all of the workers available to hire. When there are a lot of identical firms, and lots of workers with similar skills, the labor market is perfectly competitive. In a perfectly competitive market, savvy employers pay the market wage. But if you pay less, good workers go to other firms. When to decide on whether to hire an additional worker your costs and production at current levels marginal benefits greater than the marginal costs incurred. Cost-benefit principle - hire one more worker only if that extra worker yields. Opportunity cost principle - or what? you can hire that extra worker or keep. Marginal cost of hiring another worker is the increase in the firm"s costs due to.

Related Questions

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.

rosehyena631

A monopsonist faces a labor supply curve given by LS =300 + 0.01w, where w is the annual salary.

a. What is the lowest salary the firm can pay yet still induce one worker to want to work for the firm? What is the lowest salary the firm must pay to induce two workers to work for the firm?

b. What is the marginal cost to the firm of adding a second worker given that it must pay all employees the same wage? Is this greater than, less than, or equal to the wage paid to each of the two workers?

c. In general, the marginal cost of hiring additional labor for this firm is given by MW C = 29, 900 + 200L. If the firm's labor demand curve is given by LD = 398 - 0.01w, what is the profit-maximizing number of workers the monopsonist should hire? What is the salary the workers will be paid?

blushgnu391

A monopsonist faces a labor supply curve given by LS = 300 + 0.01w, where w is the annual salary.

a. What is the lowest salary the firm can pay yet still induce one worker to want to work for the firm? What is the lowest salary the firm must pay to induce two workers to work for the firm?

c. In general, the marginal cost of hiring additional labor for this firm is given by MW C = 29, 900 + 200L. If the firm's labor demand curve is given by LD = 398 0.01w, what is the profit-maximizing number of workers the monopsonist should hire? What is the salary the workers will be paid?

cyanclam124

ECON 101 Chapter Notes - Chapter 13: Marginal Revenue Productivity Theory Of Wages, Marginal Revenue, Demand Curve

ECON 101 Full Course Notes

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