Question 1

Relative to a competitive labor market,monopsony

Accepted Answer

A)  is also efficient. 
B)  creates a deadweight loss because it pays an excessive wage. 
C)  creates a deadweight loss because the wage is below the marginal revenue product of labor. 
D)  creates a deadweight loss because the wage is above the marginal revenue product of labor. 
A)  is also efficient. 
B)  creates a deadweight loss because it pays an excessive wage. 
C)  creates a deadweight loss because the wage is below the marginal revenue product of labor. 
D)  creates a deadweight loss because the wage is above the marginal revenue product of labor.

Question 2

XYZ Co.operates in a competitive market.Its production function is q = LαKβ.The exponents,α and β,are both less than 1.The firm's capital is fixed,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of K,w,and p.How does the firm react to an increase in the wage rate?

Accepted Answer

MP_L = αL^α^-1K^β.The firm sets w = p(α

Question 3

Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant.

Accepted Answer

The input price decrease will lead to ad

Question 4

If a firm buys its labor in a competitive market,then a short-run increase in the price of the firm's output will cause the firm to

Accepted Answer

A)  offer a higher wage. 
B)  hire fewer workers. 
C)  hire more workers. 
D)  offer a lower wage. 
A)  offer a higher wage. 
B)  hire fewer workers. 
C)  hire more workers. 
D)  offer a lower wage.

Question 5

Suppose the marginal product of labor equals 1/L.If the firm can sell its output for $10 per unit,and the wage is $1 per unit,how many units of labor will the firm hire?

Accepted Answer

A)  0 
B)  1 
C)  10 
D)  100 
A)  0 
B)  1 
C)  10 
D)  100

Question 6

A firm faces competitive markets for its inputs and its output.At the profit-maximizing level of output,its marginal cost is $10 and the wage paid is $2.If the MPL = L-0.5,how many workers will be hired by the firm?

Accepted Answer

A)  35 
B)  40 
C)  25 
D)  5 
A)  35 
B)  40 
C)  25 
D)  5

Question 7

If a firm pays its workers $10 per hour,the marginal product of labor is 5 units per hour,and the price of the firm's product is $15 per unit,what is the price elasticity of demand facing the firm?

Accepted Answer

A)  -1.15 
B)  -2.15 
C)  -1.0 
D)  -3.56 
A)  -1.15 
B)  -2.15 
C)  -1.0 
D)  -3.56

Question 8

In the short run,a competitive firm has a marginal product of labor,MPL = 8L-0.5.The output price is $16 per unit and the wage is $2 per hour.At the profit-maximizing level,how many units of labor are hired by the firm?

Accepted Answer

A)  L = 4 
B)  L = 6 
C)  L = 12 
D)  L = 8 
A)  L = 4 
B)  L = 6 
C)  L = 12 
D)  L = 8

Question 9

The demand for a monopoly's output is p = 50 - Q.The monopoly's marginal cost is $4 and the market wage is $2.How many units of labor are demanded by the monopoly?

Accepted Answer

A)  L = 46 
B)  L = 23 
C)  L = 0 
D)  L = 10 
A)  L = 46 
B)  L = 23 
C)  L = 0 
D)  L = 10

Question 10

If the price of a competitive firm's output increases,the firm responds in the short run by demanding more labor.

Accepted Answer

A) True 
 B)False

Question 11

If wages for a certain type of labor were higher in one market than in another,then

Accepted Answer

A)  the differential would exist into the long run. 
B)  labor would move from the high wage market to the low wage market until wages were equal. 
C)  labor would move from the low wage market to the high wage market until wages were equal. 
D)  firms would not be acting as profit maximizers. 
A)  the differential would exist into the long run. 
B)  labor would move from the high wage market to the low wage market until wages were equal. 
C)  labor would move from the low wage market to the high wage market until wages were equal. 
D)  firms would not be acting as profit maximizers.

Question 12

Why is the short-run demand curve for labor downward sloping?

Accepted Answer

The firm will pay another unit of labor

Question 13

Because of market power,wages are higher under monopsony than under competitive conditions.

Accepted Answer

A) True 
 B)False

Question 14

The steeper the labor supply curve,

Accepted Answer

A)  the higher the wage the monopsonist pays. 
B)  the lower the wage the monopsonist pays. 
C)  the smaller the difference between the wage and the marginal expenditure on labor. 
D)  the better off workers are. 
A)  the higher the wage the monopsonist pays. 
B)  the lower the wage the monopsonist pays. 
C)  the smaller the difference between the wage and the marginal expenditure on labor. 
D)  the better off workers are.

Question 15

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

Accepted Answer

The price the firm receives for each uni

Question 16

To derive the labor market demand curve,the labor demand curves for each firm in the output market of interest are summed.

Accepted Answer

A) True 
 B)False

Question 17

Monopolization of either the labor market or the output market results in

Accepted Answer

A)  higher wages than when both are competitive. 
B)  a higher output price than when both are competitive. 
C)  a higher level of output than when both are competitive. 
D)  All of the above. 
A)  higher wages than when both are competitive. 
B)  a higher output price than when both are competitive. 
C)  a higher level of output than when both are competitive. 
D)  All of the above.

Question 18

The profit-maximizing condition for a firm selling its output in a competitive market and buying its resources in a competitive market is

Accepted Answer

A)  P = MC only. 
B)  MRP = wage only. 
C)  Both A and B. 
D)  Neither A nor B. 
A)  P = MC only. 
B)  MRP = wage only. 
C)  Both A and B. 
D)  Neither A nor B.

Question 19

A firm's demand for labor is downward sloping because of

Accepted Answer

A)  diminishing marginal productivity of labor. 
B)  diminishing marginal utility. 
C)  price pressure. 
D)  workers' increased willingness to work for higher wages. 
A)  diminishing marginal productivity of labor. 
B)  diminishing marginal utility. 
C)  price pressure. 
D)  workers' increased willingness to work for higher wages.

Question 20

Company towns are often decried as monopsonists.Why was it unlikely that another employer would move into a company town?

Accepted Answer

A)  The marginal workers available in the company town had low marginal revenue product. 
B)  The existing monopsonist had a first-mover advantage. 
C)  The marginal workers available in the company town would demand a wage higher than that obtained at the existing monopsonist. 
D)  Any of the above. 
A)  The marginal workers available in the company town had low marginal revenue product. 
B)  The existing monopsonist had a first-mover advantage. 
C)  The marginal workers available in the company town would demand a wage higher than that obtained at the existing monopsonist. 
D)  Any of the above.

Relative to a competitive labor market,monopsony

Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant.

If a firm buys its labor in a competitive market,then a short-run increase in the price of the firm's output will cause the firm to

Suppose the marginal product of labor equals 1/L.If the firm can sell its output for $10 per unit,and the wage is $1 per unit,how many units of labor will the firm hire?

A firm faces competitive markets for its inputs and its output.At the profit-maximizing level of output,its marginal cost is $10 and the wage paid is $2.If the MPL = L^-0.5,how many workers will be hired by the firm?

If a firm pays its workers $10 per hour,the marginal product of labor is 5 units per hour,and the price of the firm's product is $15 per unit,what is the price elasticity of demand facing the firm?

In the short run,a competitive firm has a marginal product of labor,MPL = 8L^-0.5.The output price is $16 per unit and the wage is $2 per hour.At the profit-maximizing level,how many units of labor are hired by the firm?

The demand for a monopoly's output is p = 50 - Q.The monopoly's marginal cost is $4 and the market wage is $2.How many units of labor are demanded by the monopoly?

If the price of a competitive firm's output increases,the firm responds in the short run by demanding more labor.

If wages for a certain type of labor were higher in one market than in another,then

Why is the short-run demand curve for labor downward sloping?

Because of market power,wages are higher under monopsony than under competitive conditions.

The steeper the labor supply curve,

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

To derive the labor market demand curve,the labor demand curves for each firm in the output market of interest are summed.

Monopolization of either the labor market or the output market results in

The profit-maximizing condition for a firm selling its output in a competitive market and buying its resources in a competitive market is

A firm's demand for labor is downward sloping because of

Company towns are often decried as monopsonists.Why was it unlikely that another employer would move into a company town?

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

Relative to a competitive labor market,monopsony

Explain why a decrease in an input price causes less of an increase in the quantity demanded of the factor if we assumed that product price remained constant.

If a firm buys its labor in a competitive market,then a short-run increase in the price of the firm's output will cause the firm to

Suppose the marginal product of labor equals 1/L.If the firm can sell its output for $10 per unit,and the wage is $1 per unit,how many units of labor will the firm hire?

A firm faces competitive markets for its inputs and its output.At the profit-maximizing level of output,its marginal cost is $10 and the wage paid is $2.If the MPL = L-0.5,how many workers will be hired by the firm?

If a firm pays its workers $10 per hour,the marginal product of labor is 5 units per hour,and the price of the firm's product is $15 per unit,what is the price elasticity of demand facing the firm?

In the short run,a competitive firm has a marginal product of labor,MPL = 8L-0.5.The output price is $16 per unit and the wage is $2 per hour.At the profit-maximizing level,how many units of labor are hired by the firm?

The demand for a monopoly's output is p = 50 - Q.The monopoly's marginal cost is $4 and the market wage is $2.How many units of labor are demanded by the monopoly?

If the price of a competitive firm's output increases,the firm responds in the short run by demanding more labor.

If wages for a certain type of labor were higher in one market than in another,then

Why is the short-run demand curve for labor downward sloping?

Because of market power,wages are higher under monopsony than under competitive conditions.

The steeper the labor supply curve,

How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?

To derive the labor market demand curve,the labor demand curves for each firm in the output market of interest are summed.

Monopolization of either the labor market or the output market results in

The profit-maximizing condition for a firm selling its output in a competitive market and buying its resources in a competitive market is

A firm's demand for labor is downward sloping because of

Company towns are often decried as monopsonists.Why was it unlikely that another employer would move into a company town?

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

A firm faces competitive markets for its inputs and its output.At the profit-maximizing level of output,its marginal cost is $10 and the wage paid is $2.If the MPL = L^-0.5,how many workers will be hired by the firm?

In the short run,a competitive firm has a marginal product of labor,MPL = 8L^-0.5.The output price is $16 per unit and the wage is $2 per hour.At the profit-maximizing level,how many units of labor are hired by the firm?