Question 1

In a perfectly competitive resource market the labor supply curve facing the single firm is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  downward-sloping. 
D)  upward-sloping. 
A)  vertical. 
B)  horizontal. 
C)  downward-sloping. 
D)  upward-sloping.

Question 2

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 3

Assume that the market demand for a good is p = 100 - Q.Assume that the marginal product of labor is 1 and the firm can get all the labor it needs at a wage equal to 5.Compare the quantity of labor hired if the output market is competitive with the quantity hired if the output market is a monopoly.

Accepted Answer

If the output market is competitive,then

Question 4

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 5

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 6

The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,the firm will hire

Accepted Answer

A)  10 units of labor per hour. 
B)  5 units of labor per hour. 
C)  2.5 units of labor per hour. 
D)  0 units of labor per hour. 
A)  10 units of labor per hour. 
B)  5 units of labor per hour. 
C)  2.5 units of labor per hour. 
D)  0 units of labor per hour.

Question 7

Monopolies in successive markets result in

Accepted Answer

A)  a double markup for consumers. 
B)  more output than if the input market is competitive. 
C)  a lower output price than if the input market is competitive. 
D)  All of the above. 
A)  a double markup for consumers. 
B)  more output than if the input market is competitive. 
C)  a lower output price than if the input market is competitive. 
D)  All of the above.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

In the short run,a competitive firm has a marginal product of labor,MPL = 5L-0.5.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is

Accepted Answer

A)  5L-0.5. 
B)  15L-0.5. 
C)  35L-0.5. 
D)  50L-0.5. 
A)  5L-0.5. 
B)  15L-0.5. 
C)  35L-0.5. 
D)  50L-0.5.

Question 12

Monopolization of both the labor market and 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 lower 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 lower level of output than when both are competitive. 
D)  All of the above.

Question 13

If the competitive firm maximizes profit by selecting labor rather than output,it will earn greater economic profit.

Accepted Answer

A) True 
 B)False

Question 14

The difference between the marginal expenditure and the wage is greater when the supply curve of labor is

Accepted Answer

A)  less elastic at the monopsony optimum. 
B)  more elastic at the monopsony optimum. 
C)  more elastic than the demand curve. 
D)  The difference does not depend on any elasticity. 
A)  less elastic at the monopsony optimum. 
B)  more elastic at the monopsony optimum. 
C)  more elastic than the demand curve. 
D)  The difference does not depend on any elasticity.

Question 15

The demand for a monopoly's output is p = 200 - Q.The monopoly's production function is Q = 2L,and the market wage is $4.How many units of labor will the monopolist employ at its profit maximization level of output?

Accepted Answer

A)  L = 49.5 
B)  L = 4623 
C)  L = 198 
D)  L = 10 
A)  L = 49.5 
B)  L = 4623 
C)  L = 198 
D)  L = 10

Question 16

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 17

For a monopsonist,the labor supply curve is upward sloping because

Accepted Answer

A)  the monopsonist must compete with other industries for that labor. 
B)  the monopsonist requires that the laborers are highly skilled. 
C)  the monopsonist is the only buyer in that labor market. 
D)  the monopsonist restricts the supply of labor. 
A)  the monopsonist must compete with other industries for that labor. 
B)  the monopsonist requires that the laborers are highly skilled. 
C)  the monopsonist is the only buyer in that labor market. 
D)  the monopsonist restricts the supply of labor.

Question 18

A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are

Accepted Answer

A)  greater than the wage. 
B)  equal to the wage plus the increase in the wage resulting from hiring one more unit of labor hired. 
C)  greater than the wage because hiring more workers requires to pay all workers more. 
D)  All of the above. 
A)  greater than the wage. 
B)  equal to the wage plus the increase in the wage resulting from hiring one more unit of labor hired. 
C)  greater than the wage because hiring more workers requires to pay all workers more. 
D)  All of the above.

Question 19

Suppose the marginal product of labor equals 1/L.If the wage is $1 per unit of labor,what is the short-run effect on the firm's labor demand if the price of output were to double?

Accepted Answer

A)  The firm will demand half as much labor. 
B)  The firm will demand twice as much labor. 
C)  The firm will demand the same quantity of labor. 
D)  There is not enough information to determine. 
A)  The firm will demand half as much labor. 
B)  The firm will demand twice as much labor. 
C)  The firm will demand the same quantity of labor. 
D)  There is not enough information to determine.

Question 20

The increase in total revenue due to increasing the amount of labor employed by one unit is called the

Accepted Answer

A)  Marginal Product. 
B)  Marginal Revenue Product. 
C)  Average Revenue Product. 
D)  Total Revenue Product. 
A)  Marginal Product. 
B)  Marginal Revenue Product. 
C)  Average Revenue Product. 
D)  Total Revenue Product.

In a perfectly competitive resource market the labor supply curve facing the single firm is

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

Assume that the market demand for a good is p = 100 - Q.Assume that the marginal product of labor is 1 and the firm can get all the labor it needs at a wage equal to 5.Compare the quantity of labor hired if the output market is competitive with the quantity hired if the output market is a monopoly.

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

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.

The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,the firm will hire

Monopolies in successive markets result in

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

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

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

In the short run,a competitive firm has a marginal product of labor,MPL = 5L^-0.5.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is

Monopolization of both the labor market and the output market results in

If the competitive firm maximizes profit by selecting labor rather than output,it will earn greater economic profit.

The difference between the marginal expenditure and the wage is greater when the supply curve of labor is

The demand for a monopoly's output is p = 200 - Q.The monopoly's production function is Q = 2L,and the market wage is $4.How many units of labor will the monopolist employ at its profit maximization level of output?

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.

For a monopsonist,the labor supply curve is upward sloping because

A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are

Suppose the marginal product of labor equals 1/L.If the wage is $1 per unit of labor,what is the short-run effect on the firm's labor demand if the price of output were to double?

The increase in total revenue due to increasing the amount of labor employed by one unit is called the

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 a perfectly competitive resource market the labor supply curve facing the single firm is

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

Assume that the market demand for a good is p = 100 - Q.Assume that the marginal product of labor is 1 and the firm can get all the labor it needs at a wage equal to 5.Compare the quantity of labor hired if the output market is competitive with the quantity hired if the output market is a monopoly.

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

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.

The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit.If the wage is $5 per hour,the firm will hire

Monopolies in successive markets result in

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

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

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

In the short run,a competitive firm has a marginal product of labor,MPL = 5L-0.5.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is

Monopolization of both the labor market and the output market results in

If the competitive firm maximizes profit by selecting labor rather than output,it will earn greater economic profit.

The difference between the marginal expenditure and the wage is greater when the supply curve of labor is

The demand for a monopoly's output is p = 200 - Q.The monopoly's production function is Q = 2L,and the market wage is $4.How many units of labor will the monopolist employ at its profit maximization level of output?

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.

For a monopsonist,the labor supply curve is upward sloping because

A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are

Suppose the marginal product of labor equals 1/L.If the wage is $1 per unit of labor,what is the short-run effect on the firm's labor demand if the price of output were to double?

The increase in total revenue due to increasing the amount of labor employed by one unit is called the

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 = 5L^-0.5.The output price is $10 per unit and the wage is $7 per hour.The short-run labor demand curve for the firm is