Exam 3: The Demand for Labor

If the firm hires to a point where the marginal expense of labor is greater than the marginal revenue product of labor,then

Table 3.1 Number of Workers Total \# of Pots Produced Per Day 0 0 1 6 2 13 3 18 4 21 5 23 6 22 -Referring to Table 3.1,which of the following answers is INCORRECT? If pots sell for $20 each,then

If labor costs twice as much as capital (per unit),then,in the long run,

Employee subsidies will be most effective at raising the effective wage of the poor when

Most of a payroll tax is eventually paid by

Diminishing marginal returns occur because

Other things being equal,how does the labor demand curve of a firm that is not perfectly competitive in the product market (that is,the firm has some ability to set product price)differ from the labor demand curve of a firm that sells in a perfectly competitive product market? Suppose that the equilibrium wage rate increases from $15 per hour to $18 per hour.Discuss the response likely to be observed at each type of firm.Comment specifically on and explain the responses in employment likely to be observed.

A worker's hourly wage is $25 and output sells for $5 a unit.What is the minimum marginal product a worker must produce in order for a competitive employer to break even when hiring the worker?

When a competitive firm hired nine workers,its profits were $100.When it hired 10 workers,its output went from 9 to 11 units.Each unit of output sold for $10 while the wage of each worker was $12.What is the firm's new profit level?

In constructing a model of firm-level labor demand,we assume that labor is subject to diminishing marginal productivity.Explain the rationale for this assumption.

If two inputs are complements in production,

A competitive firm uses two inputs: capital and labor.At its current level of hiring of both inputs,capital's marginal product is 12 while labor's marginal product is 18.Capital's cost (C)is $8 per unit while labor's cost (W)is $9.In the long run,to produce the same output at a lower cost,the firm should

An employer who is a monopolist in the product market,other things being equal,will probably

The marginal income associated with a unit of input is found by

Is the firm's labor demand curve more wage sensitive in the short run or in the long run? Explain and use the concepts of substitution effect and scale effect in answering the question.

When deciding the salary of a sports star,

Studies show that most of a payroll tax is paid by workers in the form of lowered wages.If true,these studies imply

Suppose that the XYZ Company hires labor and capital in competitive input markets.Assume that labor costs W = $200 per day and that a unit of capital costs C = $150 per day.At the current level of production,labor's marginal product is MPL = 40 units of output produced per day and capital's marginal product is MPK = 30 units of output per day.Given the information provided,is the firm minimizing the cost of current production? Explain why or why not.If the wage were to increase to $W ^ { \prime }$ = $240 per day,discuss and explain the long run adjustments that the firm would make in response to the wage increase.

If skilled workers are gross complements with low-skilled immigrant labor,then,when there is an increase in low-skilled immigrant labor,

Suppose that a firm is competitive in both the product market and the labor market.If the market determined wage rate decreases,the firm's demand for labor increases.Explain why using the marginal productivity theory of input demand.