Question 1

When buyers have a degree of market power, it is called:

Accepted Answer

Monopsony power refers to the buyer's power to influence the market by being the only major buyer of a certain product or service, giving them the ability to negotiate lower prices or impose other demands on suppliers. This results in decreased competition among suppliers and a concentration of market power in the hands of the buyer.

Question 2

Reference: 1456 
-(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets)If this diagram portrayed a monopsony market, the equilibrium wage rate would be:

Accepted Answer

The answer of Reference: 1456 
-(Exhibit: Wage-Employment Model in Perfectly...

Question 3

Reference: 1446  
-(Exhibit: Monopsony)Given monopsony in the factor market, how much labor will be hired?

Accepted Answer

In a monopsony, the quantity of labor hired is determined at the point where the marginal factor cost (MFC) curve intersects the marginal revenue product (MRP) curve. Without the specific exhibit, the correct answer cannot be directly identified from the given options. However, assuming option B correctly represents this intersection point, it would be the correct choice.

Question 4

Reference: 1446  
-(Exhibit: Monopsony)Which of the following is (are)true?

Accepted Answer

All of the given statements are true. In a perfectly competitive factor market, the price of a factor is equal to its marginal factor cost (MFC). However, in the case of imperfect competition in the factor market, the price of a factor is less than the MFC. In a perfect competition product market, the marginal revenue product (MRP) is equal to the product of marginal product (MP) and the price of output. But in an imperfect competition product market, MRP is equal to MP times MR, which is less than MP times price. Therefore, all the given statements are true.

Question 5

A firm buying factors of production in a perfectly competitive factor market will hire labor where:

Accepted Answer

The answer of A firm buying factors of production in...

Question 6

Reference: 1456 
-(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets)If this diagram portrayed a perfectly competitive market, the equilibrium-wage rate would be:

Accepted Answer

In a perfectly competitive market, the equilibrium wage rate is determined where the supply of labor (which can be represented by the upward sloping line in such diagrams) intersects with the demand for labor (downward sloping line). This point represents the highest wage that firms are willing to pay for the last unit of labor (marginal labor) and the lowest wage at which workers are willing to supply that marginal unit of labor, ensuring all workers willing to work at that wage can find employment and all firms wanting to hire at that wage can find workers. Without seeing the specific diagram, option B (0J) is chosen based on the typical representation of these concepts in economic models.

Question 7

Reference: 1446  
-(Exhibit: Monopsony)Given perfect competition in the factor market, how much labor will be hired?

Accepted Answer

The answer of Reference: 1446  
-(Exhibit: Monopsony)Given perfect competition...

Question 8

A profit-maximizing firm following the marginal decision rule will:

Accepted Answer

The marginal decision rule states that a firm should hire additional units of input (labor) as long as the marginal revenue product (MRP) is greater than the marginal factor cost (MFC). MRP represents the additional revenue generated by an additional unit of labor, while MFC represents the additional cost incurred by the firm when it hires an additional unit of labor. Hiring too much labor when MRP < MFC would result in diminishing returns and lower profits. Conversely, not hiring enough labor when MRP > MFC would result in lost profits due to missed opportunities. Therefore, a firm will hire labor up to the point where MRP = MFC, where it achieves the highest level of profits.

Question 9

Reference: 1446  
-(Exhibit: Monopsony)Given ________ in the labor market, labor receives a wage that is _______ the MRP; in _______ , labor receives a wage that is ________ MRP.

Accepted Answer

Monopsony in the labor market means that there is a single buyer or employer for labor, which gives the employer market power to pay lower wages than what would be paid in a perfectly competitive market. Therefore, in a monopsonistic factor market, the wage received by labor is less than the MRP. In contrast, in perfectly competitive factor markets, where there are many buyers or employers for labor, the wage received by labor is equal to the MRP. Therefore, the best choice is B.

Question 10

Reference: 1456 
-(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets)If this diagram portrayed a monopsony factor market, the equilibrium employment level would be:

Accepted Answer

The answer of Reference: 1456 
-(Exhibit: Wage-Employment Model in Perfectly...

Question 11

A monopsony firm in the labor market:

Accepted Answer

The answer of A monopsony firm in the labor market:
...

Question 12

Reference: 1446  
-(Exhibit: Monopsony)Given monopsony in the factor market, the equilibrium wage and quantity of labor would be:

Accepted Answer

The answer of Reference: 1446  
-(Exhibit: Monopsony)Given monopsony in...

Question 13

Reference: 1456 
-A firm that is a monopsony in its market for a factor of production:

Accepted Answer

A monopsony in its market for a factor of production constitutes the entire market for that factor. This means that the firm is the sole buyer of the factor, giving it market power to influence the price. However, it does not face a horizontal supply curve of labor and can change the quantity of the factor it hires. It is also not a price taker, as it has the ability to affect the wage rate it pays for the factor.

Question 14

Reference: 1446  
-(Exhibit: Monopsony)Given monopsony in the factor market, the wage would be:

Accepted Answer

The answer of Reference: 1446  
-(Exhibit: Monopsony)Given monopsony in...

Question 15

A _______ has _______ power if it faces a(n)_______ curve for a factor of production.

Accepted Answer

A monopsony is a market structure in which there is only one buyer for a particular product or service, giving the buyer market power. If the supply curve for a factor of production (such as labor) is upward-sloping, the monopsonist can decrease its purchases and pay lower prices, leading to a lower equilibrium quantity and price. Therefore, a buyer with monopsony power faces an upward-sloping supply curve. Choice A is incorrect because a buyer with monopoly power would face a downward-sloping supply curve, since it is the only seller in the market. Choice B is incorrect because a seller with monopoly power would face an upward-sloping demand curve, as it can set the price and quantity of the product it sells. Choice D is incorrect because a buyer with monopsony power wouldn't face a horizontal supply curve, as this would imply that it can buy any quantity of the factor of production at a single price.

Question 16

Reference: 1456 
-(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets)If this diagram portrayed a perfectly competitive factor market, the equilibrium-employment level would be:

Accepted Answer

In a perfectly competitive factor market, the equilibrium point is where the supply and demand curves intersect, which is at point 0T. At this point, the wage rate is W* and employment level is L*. Therefore, the correct answer is C.

Question 17

Under perfect competition in the product market, the price of a product will be ________ MC, and under perfect competition in the factor market, the price of a factor will be _______ MRP.

Accepted Answer

Under perfect competition, in the product market, the price is equal to the marginal cost to maximize profits for firms, and in the factor market, the price of a factor is equal to its marginal revenue product to maximize the total revenue for firms. Therefore, the correct choice is C, wherein the price in both markets is equal to their respective marginal values.

Question 18

For the monopsony firm:

Accepted Answer

The answer of For the monopsony firm:
...

Question 19

A firm that has a dominant position in a local labor market may have _______ power in that market.

Accepted Answer

A firm that has a dominant position in a local labor market may have monopsony power in that market. Monopsony power refers to the ability of a firm to set lower wages and hire fewer workers, due to its considerable influence in the labor market. This can result in lower wages for workers and reduced competition for the firm. Therefore, choice D, monopsony, is the best answer. The other choices are not relevant in this context - a monopoly would refer to a firm's dominance in an entire market, not just the labor market; monopolistic refers to a firm's ability to differentiate its product from others; and key-industry is not a relevant term in this context.

Question 20

Reference: 1446  
-(Exhibit: Monopsony)Given perfect competition in the factor market, the wage would be:

Accepted Answer

In a perfectly competitive factor market, the wage rate is determined where the supply of labor (S1U1B1) intersects with the demand for labor (D1). At this point, the equilibrium wage rate is WS1U1B11S1U1B0.

Quiz 14: Imperfectly Competitive Markets for Factors of Production

When buyers have a degree of market power, it is called:

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a monopsony market, the equilibrium wage rate would be:

Reference: 1446 -(Exhibit: Monopsony) Given monopsony in the factor market, how much labor will be hired?

Reference: 1446 -(Exhibit: Monopsony) Which of the following is (are) true?

A firm buying factors of production in a perfectly competitive factor market will hire labor where:

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a perfectly competitive market, the equilibrium-wage rate would be:

Reference: 1446 -(Exhibit: Monopsony) Given perfect competition in the factor market, how much labor will be hired?

A profit-maximizing firm following the marginal decision rule will:

Reference: 1446 -(Exhibit: Monopsony) Given ____ in the labor market, labor receives a wage that is _ the MRP; in _ , labor receives a wage that is ____ MRP.

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a monopsony factor market, the equilibrium employment level would be:

A monopsony firm in the labor market:

Reference: 1446 -(Exhibit: Monopsony) Given monopsony in the factor market, the equilibrium wage and quantity of labor would be:

Reference: 1456 -A firm that is a monopsony in its market for a factor of production:

Reference: 1446 -(Exhibit: Monopsony) Given monopsony in the factor market, the wage would be:

A ___ has _ power if it faces a(n) _____ curve for a factor of production.

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a perfectly competitive factor market, the equilibrium-employment level would be:

Under perfect competition in the product market, the price of a product will be __ MC, and under perfect competition in the factor market, the price of a factor will be _ MRP.

For the monopsony firm:

A firm that has a dominant position in a local labor market may have _______ power in that market.

Reference: 1446 -(Exhibit: Monopsony) Given perfect competition in the factor market, the wage would be:

Quiz 14: Imperfectly Competitive Markets for Factors of Production

When buyers have a degree of market power, it is called:

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a monopsony market, the equilibrium wage rate would be:

Reference: 1446 -(Exhibit: Monopsony) Given monopsony in the factor market, how much labor will be hired?

Reference: 1446 -(Exhibit: Monopsony) Which of the following is (are) true?

A firm buying factors of production in a perfectly competitive factor market will hire labor where:

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a perfectly competitive market, the equilibrium-wage rate would be:

Reference: 1446 -(Exhibit: Monopsony) Given perfect competition in the factor market, how much labor will be hired?

A profit-maximizing firm following the marginal decision rule will:

Reference: 1446 -(Exhibit: Monopsony) Given ________ in the labor market, labor receives a wage that is _______ the MRP; in _______ , labor receives a wage that is ________ MRP.

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a monopsony factor market, the equilibrium employment level would be:

A monopsony firm in the labor market:

Reference: 1446 -(Exhibit: Monopsony) Given monopsony in the factor market, the equilibrium wage and quantity of labor would be:

Reference: 1456 -A firm that is a monopsony in its market for a factor of production:

Reference: 1446 -(Exhibit: Monopsony) Given monopsony in the factor market, the wage would be:

A _______ has _______ power if it faces a(n) _______ curve for a factor of production.

Reference: 1456 -(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a perfectly competitive factor market, the equilibrium-employment level would be:

Under perfect competition in the product market, the price of a product will be ________ MC, and under perfect competition in the factor market, the price of a factor will be _______ MRP.

For the monopsony firm:

A firm that has a dominant position in a local labor market may have _______ power in that market.

Reference: 1446 -(Exhibit: Monopsony) Given perfect competition in the factor market, the wage would be:

Reference: 1446 -(Exhibit: Monopsony) Given ____ in the labor market, labor receives a wage that is _ the MRP; in _ , labor receives a wage that is ____ MRP.

A ___ has _ power if it faces a(n) _____ curve for a factor of production.

Under perfect competition in the product market, the price of a product will be __ MC, and under perfect competition in the factor market, the price of a factor will be _ MRP.