1. If a perfectly competitvie firm is currently employing workers to the point w

Question

1. If a perfectly competitvie firm is currently employing workers to the point where the value of the last workers marginal product is equal to the wage rate, the government imposes a minimum wage higher than the value of the workers marginal product, we can predict that

a. the firm will employ more workers

b. the firm will increase its price

c. the firm will no longer employ the marginal worker

d. the frim will pay the higher wage rate and not change the number of workers hired.

2. A firms marginal revenue product of labor curve is also

a. its long-run imput cost function

b. its marginal cost curve

c. its labor demand curve

d. its total revenue line

4. The supply of labor to an industry will decrease when

a. the price of leisure falls

b. the income effect dominates the substitiution effect

c. workers receive better employment opportunities in other industries

d. the demand for labor falls in the industery

5. Other things equal , the monopolist will

a. have lower profits than if the industry were perfectly competitve

b. hire the same number of works as a perfectly competitive industry world

c. hire fewer workers than if the industry were perfectly competitive

d. hire more workers than if the industery were perfectly competitive

14. An outward shift in the consumer demand for wheat will

a. raise the price of wheat and shift out the marginal revenue product of labor producing wheat

b. lead to downward pressure on the wages of those producing wheat

c. lead to more captial and less labor used in producing wheat.

d. raise the price of wheat and shift inward the marginal revenue product of labor producing wheat

16. The equilibrium wage rate in an industry is determined by

a. whether workers or management are better at negotiatiing

b. the intersection of the market demand curve for labor and the market supply curve for labor.

c. the strength of the subsitiution effect relative to the elasticity of demand for labor

d. finding where the market supply curve indicates that the subsitiution effect of a wage increases are offsetting.

Explanation / Answer

1. c. the firm will no longer employ the marginal worker

2.  c. its labor demand curve

4. c. workers receive better employment opportunities in other industries

5. b. hire the same number of works as a perfectly competitive industry world

14 a. raise the price of wheat and shift out the marginal revenue product of labor producing wheat

16 . b. the intersection of the market demand curve for labor and the market supply curve for labor.

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