Exam 49: Resource Markets

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor. Figure 28.6 In the figure, D = MRP implies demand for labor = Marginal Revenue Product MFC represents Marginal Factor Cost curve S represents the supply curve of labor According to Figure 28.6, if the government imposes a minimum wage of $15, what quantity of labor will a competitive firm and a monopsonist, respectively, hire?

If a person is earning $80, 000 per year as a dentist and could earn at most $45, 000 per year doing something else, his transfer earnings are ____, whereas his economic rent is ____.

Burger King has a direct demand for the cheese which it uses in its burgers.

The figure given below represents the marginal revenue product (MRP)and the marginal factor cost (MFC)of a resource in the resource market. Figure 28.3 Consider the resource market shown in Figure 28.3.Given that the resource market is perfectly competitive, determine the equilibrium price of the resource.

If there is imperfect competition in the product market, the marginal revenue product of a factor will be greater than the value of its marginal product.

The following table shows output per hour produced by the different units of labor. Table 28.1 The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue. The structure of the product market as described by Table 28.1 is:

Households' expenditure on goods and services are sources of revenue for the firms.

Consider a perfectly competitive firm that produces computers.Each additional worker at this firm can produce four computers.Calculate the marginal factor cost if the computers are sold for $1, 000 each, and the firm is maximizing profit.(Assume that marginal revenue product is the product of marginal product of the input and the marginal revenue of the firm. )

Because of their derived nature, resource markets are completely different from any other type of market studied by economists.

If the labor market is perfectly competitive the wage rate will be less than the marginal revenue product of labor.

Which of the following statements brings out the relationship between the value of marginal product (VMP)and the marginal revenue product (MRP)?

Intel microchips are an input into a computer.What happens to the demand for the microchips if the demand for computers decline?

If the price of a product increases, the demand for the resource used in producing that product decreases.

The following table shows output per hour produced by the different units of labor. Table 28.1 The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue. Refer to Table 28.1.If both the wage rate and the price of the good falls to $2, how many workers would the firm hire?

Monopsonists tend to exploit the resources as they are the sole employers of the resources.

If a resource is purchased and sold in a perfectly competitive market:

The price of a resource declines when:

The figure given below shows the marginal revenue product (MRP)of accountants in a firm. Figure 28.2 MRP = MP ´ MR According to Figure 28.2, if the marginal cost of the resource is $600:

For a perfectly competitive firm, the marginal-revenue product is equal to the marginal product multiplied by the output price.

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor. Figure 28.6 In the figure, D = MRP implies demand for labor = Marginal Revenue Product MFC represents Marginal Factor Cost curve S represents the supply curve of labor According to Figure 28.6, what is the wage paid by a monopsonist?