Exam 28: The Labor Market: Demand, Supply and Outsourcing

Ajax has just discovered that the marginal revenue product generated by the last worker hired was $125 while the marginal factor cost was $85. What should Ajax do?

The price elasticity of demand for labor will be greater, the

What is marginal factor cost? How is it related to the supply curve of an input?

We would expect that a rise in labor supply will have a proportionately larger effect on the market wage rate when

In labor markets, the substitution effect occurs when

The MRP of labor will shift to the left if

The contribution to total revenues coming from the next worker hired is

We assume that when a firm hires additional workers, the marginal physical product of labor will

Suppose firms in an industry hire unskilled labor and skilled labor. Unskilled labor is a substitute for capital and skilled labor is a complement with capital. A decrease in the real price of capital would

When the demand curve for an input is a derived demand this means that

Which of the following would cause the labor demand curve to shift to the right?

-In the above table, what is the marginal revenue product of the 1st worker?

-Refer to the above table. Suppose the price of the good sold is $4 and the marginal factor cost of labor is $600, how many units of labor will the firm hire?

If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know that

When there is an increase in the wages the banking industry offers accountants, what happens to the supply of accountants available to other industries?

-Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 11 to 12 units?

The marginal physical product of labor is the

As new substitutes for office productivity software are developed, the demand for workers in office productivity software production should

If the marginal physical product (MPP) of the last dollar spent on labor is only half as large as the MPP from the last dollar spent on capital, this firm should

The supply of labor to one industry will decrease when