Question 1

For a competitive,profit-maximizing firm,the labor demand curve is the same as the

Accepted Answer

For a competitive, profit-maximizing firm, the profit is maximized when the value of marginal product of labor is equal to the wage rate. Hence, the labor demand curve is the same as the value of marginal product curve.

Question 2

Dan owns one of the many bakeries in New York City.Which of the following events will lead to an increase in Dan's demand for the services of bakers?

Accepted Answer

The answer of Dan owns one of the many bakeries...

Question 3

What causes the labor demand curve to shift?

Accepted Answer

The answer of What causes the labor demand curve to...

Question 4

Competitive firms hire workers until the additional benefit they receive from the last worker hired is equal to

Accepted Answer

The answer of Competitive firms hire workers until the additional...

Question 5

If the demand curve for computer games shifts to the left,then the value of the marginal product of labor for computer game authors will

Accepted Answer

If the demand curve for computer games shifts to the left, it means that there is a decrease in demand for computer games. As a result, the price of computer games will decline, leading to a decrease in revenue. The decrease in revenue will cause a decrease in the value of the marginal product of labor for computer game authors, as their contribution to production will not be as valuable due to the reduction in demand. Therefore, the value of the marginal product of labor for computer game authors will fall.

Question 6

The basic tools of supply and demand apply to

Accepted Answer

The basic tools of supply and demand, such as the law of demand and the law of supply, apply to all types of markets, including markets for goods and services and markets for labor services. In both cases, the quantity demanded or supplied will respond to changes in price, and equilibrium will be reached where the quantity demanded equals the quantity supplied at a particular price.

Question 7

Which of the following events could increase the demand for labor?

Accepted Answer

An increase in the marginal productivity of workers would increase the demand for labor. This would occur because firms would want to hire more workers to take advantage of the increased productivity and generate more profits.

Note: A decrease in the wage paid to workers would not increase the demand for labor, but rather decrease it. A decrease in output price would potentially decrease demand for labor as well, as firms would have less revenue to spend on hiring workers. A decrease in the amount of capital available for workers to use may decrease demand but not necessarily always, like if a capital-intensive industry realizes the worth of highly-skilled labor.

Question 8

Factor-market analysis could not be complete without some characterization of

Accepted Answer

Factor-market analysis involves determining the demand for and supply of factors of production, such as labor, capital, and land. This analysis cannot be complete without considering the demand for the final goods and services produced using these factors (product-market demand), the marginal productivities of the different factors, and the market prices for final goods and services.

Question 9

Factor markets are different from product markets in an important way because

Accepted Answer

The demand for a factor of production, such as labor or capital, is a derived demand because it depends on the demand for the goods and services that the factor produces. This makes factor markets different from product markets, where the demand for products is direct and not necessarily derived from other markets. Equilibrium is possible in factor markets, and the law of demand holds true, so options A and C are incorrect.

Question 10

When a firm maximizes profit,

Accepted Answer

A firm maximizes profit by hiring workers up to the point where the value of the marginal product of labor (the additional revenue generated by one more worker) is equal to the wage paid to the worker.

Question 11

If the price of airline tickets falls,what will happen to the demand curve for flight attendants?

Accepted Answer

The answer of If the price of airline tickets falls,what...

Question 12

Labor markets are different from most other markets because labor demand is

Accepted Answer

Labor demand is a derived demand because it comes from the demand for the goods and services that the workers produce. This is different from most other markets where demand is a direct result of consumer preference and willingness to pay. The fact that labor is a derived demand leads to unique dynamics in labor markets, such as wage stickiness and cyclical unemployment.

Question 13

Which of the following events could decrease the demand for labor?

Accepted Answer

A decrease in demand for the final product produced by labor would lead to a decrease in demand for the labor used to produce that product. The other choices would either increase demand for labor (B) or not directly impact it (A and D).

Question 14

When we focus on the firm as a supplier of a good or a service,we assume that the firm is a profit maximizer.When we focus on the firm as a demander of labor,we assume that the firm's objective is to

Accepted Answer

When a firm is a demander of labor, its objective is to maximize profit. This is because profit is the main driver of business firms, and maximizing profit is the most common objective of firms.

Question 15

Competitive firms decide how much output to sell by producing output until the price of the good equals

Accepted Answer

Competitive firms determine the quantity to sell at the intersection of marginal revenue and marginal cost. In other words, they produce output up to the point where the marginal cost of producing an additional unit is equal to the market price. This leads to the greatest total profit for the firm. Therefore, the correct answer is (C) marginal cost.

Question 16

Which of the following best illustrates the concept of "derived demand?"

Accepted Answer

The answer of Which of the following best illustrates the...

Question 17

John owns a number of hot dog stands in New York City.He hires workers to sell hot dogs at his stands.Which of the following events will lead to a decrease in John's demand for hot dog vendors?

Accepted Answer

The answer of John owns a number of hot dog...

Question 18

Which of the following is true at the level of output at which a competitive firm maximizes profit?

Accepted Answer

At the level of output at which a competitive firm maximizes profit, price must be equal to marginal cost. This is because if price is greater than marginal cost, the firm can increase profit by producing more output. If price is less than marginal cost, the firm can increase profit by reducing output. Therefore, the profit-maximizing level of output occurs where price equals marginal cost. Options B and C are incorrect because they refer to the relationship between price and the wage or marginal product of labor, which are not directly relevant to determining the profit-maximizing level of output.

Question 19

A sandwich shop hires workers to make sandwiches and sell them to customers.If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers,then it has

Accepted Answer

In a competitive market, firms do not have control over prices as they have to take the prevailing market price. Similarly, in a competitive labor market, firms have to pay the prevailing market wage rate. Therefore, the sandwich shop has no control over either the price of sandwiches or the wage it pays to its workers.

Question 20

If the demand curve for beef shifts to the right,then the value of the marginal product of labor for butchers will

Accepted Answer

An increase in demand for beef means that more beef needs to be produced and more butchers will be needed to meet the increased demand. As a result, the marginal product of labor (MPL) for butchers will increase as each additional butcher will be able to produce more output due to the increased demand. Therefore, the value of MPL for butchers will rise.

Quiz 18: The Markets for the Factors of Production