Exam 18: Markets for Factors of Production

If the interest rate is 10 percent, the present value of a payment of $1,000 one year from today is

A monopsony maximizes its profit by hiring the level of employment that sets

If a union restricts the supply of labor but cannot change the demand for labor, the union ________ the wage rate and ________ the level of employment.

The value of marginal product (VMP) of an input such as labor is the

-The table above gives information about the labor market in Lantis, a community in which the labor market is perfectly competitive. The equilibrium wage rate is ________ an hour and the quantity of labor employed is ________ hours per day.

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $5 and the wage rate is $62.50 per day, how many workers should Winnie employ to maximize his profit?

-City-Mart is the only employer of sales clerks in Panburg. In the figure above S is the labor supply curve faced by City-Mart, VMP is City-Mart's value of marginal product curve, and MCL is its marginal cost of labor curve. If the market for sales clerks' labor in Panburg were competitive, the wage rate would be ________ per hour, and ________ hours of labor would be hired.

In a monopsony labor market, the employer hires the quantity of labor where the ________ equals the ________.

The value of marginal product equals ________ multiplied by ________.

In order to spend more time with her children, a young mother decides to work less hours as her pay increases. What does her labor supply curve look like?

If the interest rate is 20 percent, $100 to be received four years from today has a present value of approximately

-Pointy Stone State Park is the sole employer of naturalists in the area. The table above provides information about the supply of naturalists and the value of marginal product of labor for naturalists. What weekly wage will Pointy Stone State Park pay naturalists?

Which of the following decreases the supply of labor that competes with union labor?

In comparison to an employer in a competitive labor market, a monopsony employer hires ________ workers and produces ________ output.

If a firm finds that, at its current level of employment, VMP > W, it will

Because a monopsony is the only buyer in a particular market, the

As the wage rate rises, the income effect influences workers to choose ________ leisure, and the substitution effect influences workers to choose ________ leisure.

-Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City. This fact means that the value of marginal product of land is ________ in New York City and so Starbucks is willing to pay a ________ rent in New York City.

-Consider the labor market depicted in the above figure. The competitive equilibrium would be for ________ hours of employment.

Why does a firm maximize its profits by hiring so that VMP = W?