Exam 15: Factor Markets

Suppose an exhaustible resource can be sold only this period or next period.The resource owner is considering selling 100 tons of the resource this period.The future value of the resource when 100 tons are sold this period is less than the present value of the 100 tons sold this period multiplied by one plus the interest rate.What should the resource owner do?

-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,a ten cent specific tax on the good sold by the firm will cause the firm to

The spread between price and marginal cost of an exhaustible resource must grow by the rate of interest so that

At age 40,Joe is considering quitting his job and going back for a college degree.He needs two more years full-time.Tuition is $10,000 per year.He earns $30,000 per year.A college degree would raise his annual income by $10,000 per year.He will retire at age 70.Which of the following makes it less likely that Joe will decide to go back to college full-time?

For a monopoly,the value of the next worker equals

If a firm buys its labor in a competitive market,then in the short run,a decrease of the demand for the firm's product 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?

If a competitive firm faces a competitive labor market,it will hire labor until

Suppose a new cost-saving device will forever generate $1,000 net savings per year to a firm.The device costs $10,000.Using the Internal Rate of Return approach,will the firm make the investment?

For a given rate of interest,the total interest you receive from lending money

Show with a graph that an increase in the minimum wage can increase the level of employment in a monopsony market.

With respect to events like global warming,some economists suggest using falling discount rates because

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

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

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

At age 40,Joe is considering quitting his job and going back for a college degree.He needs two more years full-time.Tuition is $10,000 per year.He earns $30,000 per year.A college degree would raise his annual income by $10,000 per year.He will retire at age 70.Which of the following makes it more likely that Joe will decide to go back to college full-time?

You place $100 in a bank account that pays 8%.If you remove the interest you receive each year you can turn your stock into a flow of

What is the internal rate of return on a new $2,000 heater that would reduce your heating costs by $200 a year forever? Under what conditions would you make the purchase?

Suppose n identical Cournot firms purchase labor in a competitive labor market.How is the market demand for labor affected by the number of firms in the market?

In an economy with no inflation,explain why interest rates are positive.