Exam 49: Resource Markets

The following table shows the total output produced by different units of a resource.Assume that the resource and output markets are both perfectly competitive.The equilibrium price of the resource is $15.00, and the equilibrium price of the product is $0.50. Table 28.2 Marginal revenue product (MRP)of a resource is the product of the marginal product of the resource and the marginal revenue. Refer to Table 28.2.What is the marginal-revenue product of the third unit of the resource?

A firm under any market structure maximizes profits at a point where:

If the ratio of marginal revenue product to marginal factor cost for labor is greater than that for capital, then:

A firm that was initially a monopsonist but has to buy from a competitive resource market all of a sudden will:

Transfer earning is the minimum amount that has to be paid to a factor to allocate it in its next best alternative use.

The following figure represents the equilibrium in the labor markets. Figure 28.4 In the figure, MFC: Marginal Factor Cost curve D: Demand or the Marginal Revenue Product curve S: Supply curve Refer to Figure 28.4.A monopsonist will pay the wage rate _____ and hire _____ units of labor.

Why is the marginal revenue product curve of a factor negatively sloped?

If resource A and resource B are substitutes of each other and the price of resource A increases, then:

Earnings of a resource is termed as economic rent if:

A general study of resource markets shows that the roles of firms and households are:

If the market price of the product that employs labor in production increases:

The demand for capital, as an input in production, will decrease if:

During the recession witnessed in early 2001, many firms laid off their employees and downsized.The reason for this decrease in the demand for employees was:

The figure given below represents equilibrium in the labor market. Figure 28.5 In the figure, VMP: Value of marginal product curve MRP: Marginal revenue product curve MFC: Marginal factor cost S: Supply curve of labor Refer to Figure 28.5.What wage rate will this firm pay?

A perfectly competitive employer of an input will maximize profits from the employment of the input by equating:

The figure given below represents equilibrium in the labor market. Figure 28.5 In the figure, VMP: Value of marginal product curve MRP: Marginal revenue product curve MFC: Marginal factor cost S: Supply curve of labor In Figure 28.5, the firm is:

The following figure shows the marginal revenue product of a resource [MRP]: Figure 28.1 Assume that the resource market shown in Figure 28.1 is perfectly competitive.The MRP curve for the resource is negatively sloped because:

If a resource can be put to a single use and has no alternative uses then:

Economic rent is the sum of actual earning and transfer earning.

The producer can raise the level of profit by hiring more units of a resource if: