Question 1

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

Accepted Answer

The firm will pay another unit of labor

Question 2

For a monopoly,the value of the next worker equals

Accepted Answer

A) MR ∗ MPL. 
B) p ∗ MPL. 
C) MPL. 
D) w/MPL. 
A) MR ∗ MPL. 
B) p ∗ MPL. 
C) MPL. 
D) w/MPL.

Question 3

Suppose that a mining company employs 80% of the available laborers in a town.Explain what will happen to the number of laborers hired and the wage rate paid by the mine if a minimum wage is set at the competitive level.

Accepted Answer

The mine was operating as a mo

Question 4

Suppose a perfectly competitive firm's production function is q = L0.2K0.6 and it takes the wage and price as given.Then the firm's long-run demand for labor as a function of K,w,and p is

Accepted Answer

A) p5((0.2/w)2(0.6/r)3). 
B) p5((0.2/w)4(0.6/r)5). 
C) p5((0.2/w)5(0.6/r)4). 
D) p5((0.2/w)3(0.6/r)2). 
A) p5((0.2/w)2(0.6/r)3). 
B) p5((0.2/w)4(0.6/r)5). 
C) p5((0.2/w)5(0.6/r)4). 
D) p5((0.2/w)3(0.6/r)2).

Question 5

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

Accepted Answer

A) movement 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) movement 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 6

If a firm has market power in the output market but buys labor in a competitive market,it will hire the same quantity of labor that a competitive firm will.

Accepted Answer

A) True 
 B)False

Question 7

An exhaustible resource with a very large known reserve will most likely exhibit

Accepted Answer

A) a highly variable price in the near future. 
B) a decreasing price in the near future. 
C) an increasing price in the near future. 
D) a constant price in the near future. 
A) a highly variable price in the near future. 
B) a decreasing price in the near future. 
C) an increasing price in the near future. 
D) a constant price in the near future.

Question 8

If you invest $500 today,and the value one year from today is $1000,then the annual interest rate must be

Accepted Answer

A) 10%. 
B) 50%. 
C) 100%. 
D) 200%. 
A) 10%. 
B) 50%. 
C) 100%. 
D) 200%.

Question 9

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 10

A monopoly's demand curve for labor

Accepted Answer

A) is below that of a competitive market. 
B) is the same as that of a competitive market. 
C) is above that of a competitive market. 
D) equals p ∗ MPL. 
A) is below that of a competitive market. 
B) is the same as that of a competitive market. 
C) is above that of a competitive market. 
D) equals p ∗ MPL.

Question 11

Suppose that your college offers you two payment plans.You may either pay tuition of $10,000 per year at the beginning of each of the next four years,or pay just $38,000 before the start of freshman year.If the interest rate is 10%,what would you do? If the interest rate were 2%,what would you do? Intuitively explain the difference in your answer.

Accepted Answer

At 10%,the future stream of tuition paym

Question 12

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 13

XYZ Co.operates in a competitive market.Its production function is q = LαKβ.The exponents,α and β,are both less than one.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 14

A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.

Accepted Answer

A) True 
 B)False

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

XYZ Co.operates in a competitive market.Its marginal product of labor is 1/L,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of w and p.How much labor will the firm hire if w = 2 and p = 10?

Accepted Answer

Setting w = p ∗ MPL

Question 17

In the long run,a competitive firm has a marginal product of labor,MPL = L-1.The output price is $20 per unit and the wage is $7.25 per hour.The long-run labor demand curve for the firm is

Accepted Answer

A) 20L-0.05. 
B) 7.25L-0.05. 
C) 20L-1. 
D) 7.25L-1. 
A) 20L-0.05. 
B) 7.25L-0.05. 
C) 20L-1. 
D) 7.25L-1.

Question 18

If the interest rate is 10%,then $1 received one year from now is worth how much today?

Accepted Answer

A) $1.10 
B) $1 
C) 91¢ 
D) 90¢ 
A) $1.10 
B) $1 
C) 91¢ 
D) 90¢

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The demand for a monopoly's output is p = 100 - Q.The firm's production function is
Q = 2L.Which of the following is the firm's demand for labor?

Accepted Answer

A) w = 200 - 8L 
B) w = 200 - 4L 
C) w = 100 - L 
D) w = 2L 
A) w = 200 - 8L 
B) w = 200 - 4L 
C) w = 100 - L 
D) w = 2L

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

For a monopoly,the value of the next worker equals

Suppose that a mining company employs 80% of the available laborers in a town.Explain what will happen to the number of laborers hired and the wage rate paid by the mine if a minimum wage is set at the competitive level.

Suppose a perfectly competitive firm's production function is q = L^0.2K^0.6 and it takes the wage and price as given.Then the firm's long-run demand for labor as a function of K,w,and p is

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

If a firm has market power in the output market but buys labor in a competitive market,it will hire the same quantity of labor that a competitive firm will.

An exhaustible resource with a very large known reserve will most likely exhibit

If you invest $500 today,and the value one year from today is $1000,then the annual interest rate must be

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

A monopoly's demand curve for labor

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

A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.

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

XYZ Co.operates in a competitive market.Its marginal product of labor is 1/L,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of w and p.How much labor will the firm hire if w = 2 and p = 10?

In the long run,a competitive firm has a marginal product of labor,MPL = L^-1.The output price is $20 per unit and the wage is $7.25 per hour.The long-run labor demand curve for the firm is

If the interest rate is 10%,then $1 received one year from now is worth how much today?

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

The demand for a monopoly's output is p = 100 - Q.The firm's production function is Q = 2L.Which of the following is the firm's demand for labor?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 15: Factor Markets

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

For a monopoly,the value of the next worker equals

Suppose that a mining company employs 80% of the available laborers in a town.Explain what will happen to the number of laborers hired and the wage rate paid by the mine if a minimum wage is set at the competitive level.

Suppose a perfectly competitive firm's production function is q = L0.2K0.6 and it takes the wage and price as given.Then the firm's long-run demand for labor as a function of K,w,and p is

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

If a firm has market power in the output market but buys labor in a competitive market,it will hire the same quantity of labor that a competitive firm will.

An exhaustible resource with a very large known reserve will most likely exhibit

If you invest $500 today,and the value one year from today is $1000,then the annual interest rate must be

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

A monopoly's demand curve for labor

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

A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.

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

XYZ Co.operates in a competitive market.Its marginal product of labor is 1/L,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of w and p.How much labor will the firm hire if w = 2 and p = 10?

In the long run,a competitive firm has a marginal product of labor,MPL = L-1.The output price is $20 per unit and the wage is $7.25 per hour.The long-run labor demand curve for the firm is

If the interest rate is 10%,then $1 received one year from now is worth how much today?

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

The demand for a monopoly's output is p = 100 - Q.The firm's production function is Q = 2L.Which of the following is the firm's demand for labor?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Suppose a perfectly competitive firm's production function is q = L^0.2K^0.6 and it takes the wage and price as given.Then the firm's long-run demand for labor as a function of K,w,and p is

In the long run,a competitive firm has a marginal product of labor,MPL = L^-1.The output price is $20 per unit and the wage is $7.25 per hour.The long-run labor demand curve for the firm is