Question 1

In comparison to a competitive market,a monopsony generates

Accepted Answer

A)  deadweight loss. 
B)  larger low-wage employment. 
C)  more high-wages jobs. 
D)  more output. 
A)  deadweight loss. 
B)  larger low-wage employment. 
C)  more high-wages jobs. 
D)  more output. A

Question 2

Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?

Accepted Answer

To hire additional labor,the monopsonist must increase the wage paid to all units of labor.Thus,the marginal expenditure of the next unit of labor is the higher wage plus the wage increase paid to all previously hired labor.

Question 3

If a firm is a price taker in both the labor market and the output market,it will

Accepted Answer

A)  earn zero economic profit in the short run. 
B)  hire labor until the marginal product of labor equals zero. 
C)  hire labor until the marginal revenue product equals the output price. 
D)  hire labor until the marginal revenue product equals the wage rate. 
A)  earn zero economic profit in the short run. 
B)  hire labor until the marginal product of labor equals zero. 
C)  hire labor until the marginal revenue product equals the output price. 
D)  hire labor until the marginal revenue product equals the wage rate. D

Question 4

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

Accepted Answer

The firm's marginal revenue product of l

Question 5

Explain why consumers benefit from a merger between a monopoly producer and its monopoly supplier of labor.

Accepted Answer

A monopoly supplier of labor s

Question 6

Firm A is a monopoly.The demand for its output is p = 90 - Q.Production is such that Q = L.Firm A hires labor in a competitive market where the wage is $10.Firm A will hire

Accepted Answer

A)  10 units of labor. 
B)  20 units of labor. 
C)  30 units of labor. 
D)  40 units of labor. 
A)  10 units of labor. 
B)  20 units of labor. 
C)  30 units of labor. 
D)  40 units of labor.

Question 7

A monopsonist faces a constant elasticity of labor supply of 1.5.If the monopsonist pays $15 per hour,its marginal expenditure equals

Accepted Answer

A)  $15. 
B)  $25. 
C)  $7. 
D)  25%. 
A)  $15. 
B)  $25. 
C)  $7. 
D)  25%.

Question 8

The demand for an input used in a fixed proportions technology

Accepted Answer

A)  is identical to the demand for the other inputs. 
B)  is greater than the demand for the end product itself. 
C)  lies below the demand for the end product itself. 
D)  is the same as the demand for the end product itself. 
A)  is identical to the demand for the other inputs. 
B)  is greater than the demand for the end product itself. 
C)  lies below the demand for the end product itself. 
D)  is the same as the demand for the end product itself.

Question 9

The marginal expenditure of a monopsonist is $4.The wage it currently pays is $3.The labor supply curve has a constant elasticity.What is the elasticity of the labor supply?

Accepted Answer

A)  0.33 
B)  0.66 
C)  1 
D)  3 
A)  0.33 
B)  0.66 
C)  1 
D)  3

Question 10

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

Accepted Answer

A)  pay the same wage to both types of labor. 
B)  pay a lower wage to the labor purchased in the competitive market. 
C)  pay a higher wage to the labor purchased in the competitive market. 
D)  not exercise any of its monopsony power. 
A)  pay the same wage to both types of labor. 
B)  pay a lower wage to the labor purchased in the competitive market. 
C)  pay a higher wage to the labor purchased in the competitive market. 
D)  not exercise any of its monopsony power.

Question 11

For a monopoly,the value of the next worker equals

Accepted Answer

A)  MR ∗ MPL. 
B)  (price + the effect of increased output on price) ∗ MPL. 
C)  P(1 + 1/e) ∗ MPL 
D)  All of the above. 
A)  MR ∗ MPL. 
B)  (price + the effect of increased output on price) ∗ MPL. 
C)  P(1 + 1/e) ∗ MPL 
D)  All of the above.

Question 12

Explain why baseball ticket prices may increase when a team pays a new player a large salary,but will remain unchanged when a current player gets a salary increase.

Accepted Answer

The salary increase of a current player

Question 13

Suppose there are profit-maximizing,competitive buyers and sellers of labor in an industry,and the amount of capital is fixed for each firm.Explain under what condition the output price will equal the wage rate.

Accepted Answer

The profit-maximizing buyer of labor set

Question 14

A firm faces competitive markets for its inputs and its output.Its marginal revenue product of labor

Accepted Answer

A)  is increasing in the output price. 
B)  is decreasing in the output price. 
C)  is independent of the output price. 
D)  has an inverted U-shape. 
A)  is increasing in the output price. 
B)  is decreasing in the output price. 
C)  is independent of the output price. 
D)  has an inverted U-shape.

Question 15

Monopolization of the labor market restricts output because

Accepted Answer

A)  fewer workers offer their services. 
B)  the higher wage raises the firm's marginal cost. 
C)  monopolized workers are less productive. 
D)  a monopolized labor market means there is also a monopolized output market. 
A)  fewer workers offer their services. 
B)  the higher wage raises the firm's marginal cost. 
C)  monopolized workers are less productive. 
D)  a monopolized labor market means there is also a monopolized output market.

Question 16

A change in the wage causes a shift in the supply curve for labor and a

Accepted Answer

A)  shift along the demand curve for labor. 
B)  shift in the demand curve for labor. 
C)  rotation in the demand curve for labor. 
D)  It cannot be determined by the information provided. 
A)  shift along the demand curve for labor. 
B)  shift in the demand curve for labor. 
C)  rotation in the demand curve for labor. 
D)  It cannot be determined by the information provided.

Question 17

Under monopsony,the wage rate

Accepted Answer

A)  equals the marginal product of labor. 
B)  equals the marginal revenue product of labor. 
C)  is less than the marginal revenue product of labor. 
D)  is greater than it would be under perfect competition. 
A)  equals the marginal product of labor. 
B)  equals the marginal revenue product of labor. 
C)  is less than the marginal revenue product of labor. 
D)  is greater than it would be under perfect competition.

Question 18

In the short run,a competitive firm has a marginal product of labor,MPL = 2L-0.25.The output price is $4 per unit and the wage is $5 per hour.The short-run labor demand curve for the firm is

Accepted Answer

A)  10L-0.25. 
B)  8L-0.5. 
C)  4L0.25. 
D)  8L-0.25. 
A)  10L-0.25. 
B)  8L-0.5. 
C)  4L0.25. 
D)  8L-0.25.

Question 19

In the short run,which one of the following causes a competitive firm to hire more labor?

Accepted Answer

A)  an increase in wage rate 
B)  an increase in the output price 
C)  a specific tax imposed on the firm's output 
D)  a decrease in the output price 
A)  an increase in wage rate 
B)  an increase in the output price 
C)  a specific tax imposed on the firm's output 
D)  a decrease in the output price

Question 20

The labor market demand curve

Accepted Answer

A)  is the summation of the labor demand curve for each output market. 
B)  is identical to the average firm labor demand curve. 
C)  is the sum of the wages paid for each unit of labor of the individual firms labor demands. 
D)  is always upward sloping for competitive labor markets. 
A)  is the summation of the labor demand curve for each output market. 
B)  is identical to the average firm labor demand curve. 
C)  is the sum of the wages paid for each unit of labor of the individual firms labor demands. 
D)  is always upward sloping for competitive labor markets.

In comparison to a competitive market,a monopsony generates

Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?

If a firm is a price taker in both the labor market and the output market,it will

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

Explain why consumers benefit from a merger between a monopoly producer and its monopoly supplier of labor.

Firm A is a monopoly.The demand for its output is p = 90 - Q.Production is such that Q = L.Firm A hires labor in a competitive market where the wage is $10.Firm A will hire

A monopsonist faces a constant elasticity of labor supply of 1.5.If the monopsonist pays $15 per hour,its marginal expenditure equals

The demand for an input used in a fixed proportions technology

The marginal expenditure of a monopsonist is $4.The wage it currently pays is $3.The labor supply curve has a constant elasticity.What is the elasticity of the labor supply?

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

For a monopoly,the value of the next worker equals

Explain why baseball ticket prices may increase when a team pays a new player a large salary,but will remain unchanged when a current player gets a salary increase.

Suppose there are profit-maximizing,competitive buyers and sellers of labor in an industry,and the amount of capital is fixed for each firm.Explain under what condition the output price will equal the wage rate.

A firm faces competitive markets for its inputs and its output.Its marginal revenue product of labor

Monopolization of the labor market restricts output because

A change in the wage causes a shift in the supply curve for labor and a

Under monopsony,the wage rate

In the short run,a competitive firm has a marginal product of labor,MPL = 2L^-0.25.The output price is $4 per unit and the wage is $5 per hour.The short-run labor demand curve for the firm is

In the short run,which one of the following causes a competitive firm to hire more labor?

The labor market demand curve

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 15: Factor Markets

In comparison to a competitive market,a monopsony generates

Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?

If a firm is a price taker in both the labor market and the output market,it will

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

Explain why consumers benefit from a merger between a monopoly producer and its monopoly supplier of labor.

Firm A is a monopoly.The demand for its output is p = 90 - Q.Production is such that Q = L.Firm A hires labor in a competitive market where the wage is $10.Firm A will hire

A monopsonist faces a constant elasticity of labor supply of 1.5.If the monopsonist pays $15 per hour,its marginal expenditure equals

The demand for an input used in a fixed proportions technology

The marginal expenditure of a monopsonist is $4.The wage it currently pays is $3.The labor supply curve has a constant elasticity.What is the elasticity of the labor supply?

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

For a monopoly,the value of the next worker equals

Explain why baseball ticket prices may increase when a team pays a new player a large salary,but will remain unchanged when a current player gets a salary increase.

Suppose there are profit-maximizing,competitive buyers and sellers of labor in an industry,and the amount of capital is fixed for each firm.Explain under what condition the output price will equal the wage rate.

A firm faces competitive markets for its inputs and its output.Its marginal revenue product of labor

Monopolization of the labor market restricts output because

A change in the wage causes a shift in the supply curve for labor and a

Under monopsony,the wage rate

In the short run,a competitive firm has a marginal product of labor,MPL = 2L-0.25.The output price is $4 per unit and the wage is $5 per hour.The short-run labor demand curve for the firm is

In the short run,which one of the following causes a competitive firm to hire more labor?

The labor market demand curve

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

In the short run,a competitive firm has a marginal product of labor,MPL = 2L^-0.25.The output price is $4 per unit and the wage is $5 per hour.The short-run labor demand curve for the firm is