Exam 14: Resource Markets

Scenario 14.1 A worker in Firm A earns an income of $5,000 per month.He has been offered a job in Firm B where he will be paid a salary of $7,000 per month. -Refer to Scenario 14.1.If the worker joins Firm B,his economic rent is:

Goods which are demanded to produce something else are said to have a(n):

Transfer earning is the minimum amount that has to be paid to a factor to allocate it in its next best alternative use.

The following table shows output per hour produced by the different units of labor. Table 14.1 The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue. The structure of the product market as described by Table 14.1 is:

A firm is said to be a monopsonist if it is the sole seller of a commodity in the market.

The following table shows the total output produced by different units of a resource.Assume that the resource and output markets are both perfectly competitive.The equilibrium price of the resource is $15.00,and the equilibrium price of the product is $0.50. Table 14.2 Marginal revenue product (MRP) of a resource is the product of the marginal product of the resource and the marginal revenue. Refer to Table 14.2.How many units of the resource will a profit-maximizing firm hire?

If the ratio of marginal revenue product to marginal factor cost for labor is greater than that for capital,then:

Monopsonists tend to exploit the resources as they are the sole employers of the resources.

Households' expenditure on goods and services are sources of revenue for the firms.

The following table shows the marginal revenue of a firm and the marginal physical product of different units of labor in a perfectly competitive labor market. Table 14.5 Note: Marginal revenue product of a resource is the product of MPP and MR. In Table 14.5,at what wage rate would one worker be hired by a profit-maximizing firm?

The resource market is the same as the product market except that,in the resource market:

For a perfectly competitive firm,the marginal-revenue product is equal to the marginal product multiplied by the output price.

If the labor market is perfectly competitive the wage rate will be less than the marginal revenue product of labor.

The following table shows the marginal productivity of different units of labor for producing a product. Table 14.4 In the table, MR: Marginal Revenue MPP: Marginal Physical Product According to Table 14.4,how many laborers should be hired if the wage rate is $18? (Marginal revenue product = MPP ´ MR)

In the market for resources,demand and supply:

Burger King has a direct demand for the cheese which it uses in its burgers.

If a particular factor has a specific use its transfer earning is very high.

A perfectly competitive employer of an input will maximize profits from the employment of the input by equating:

Scenario 14.1 A worker in Firm A earns an income of $5,000 per month.He has been offered a job in Firm B where he will be paid a salary of $7,000 per month. -Refer to Scenario 14.1.If the worker joins Firm B,his opportunity cost is:

The following table shows total output produced by different units of capital. Table 14.3 The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue. In Table 14.3,how many units of capital will the firm hire if the price per unit of capital is $60?