Exhibit 11-14 Labor cost data for amonopsonist Wage Rate Number of Workers $ 0 0
ID: 1240610 • Letter: E
Question
Exhibit 11-14 Labor cost data for amonopsonist
Wage
Rate
Number of
Workers
$ 0
0
5
10
8
20
12
30
16
40
In Exhibit 11-14, the monopsonist will maximize profits by hiringhow many workers?
A)10.
B)20.
C)40.
D)Unable to determine from the information given.
E)30.
12.
In the short run, if average variable cost equals $50, averagetotal cost equals $75, and output equals 100, the total fixed costmust be:
A)$5,000.
B)$25.
C)$2,500.
D)$7,500.
13.
If a firm has no ability to select the price of its product,it:
A)has a horizontal individual demand curve.
B)will go out of business due to losses.
C)is a price-maker.
D)cannot maximize profit.
14.
Exhibit 7-1 shows the change in the short-run production ofpizzas as more workers are hired. The table shows the marginalproduct of the labor input is decreasing with the hiring of thethird worker. A possible reason for this diminishing marginalproduct is:
A)decreases in fixed cost.
B)increases in plant size.
C)decreased wages.
D)decreases in labor productivity.
E)increased division of labor as additional workers arehired.
15.
Which of the following is a distinction between perfectlycompetitive and monopolistic competition?
Wage
Rate
Number of
Workers
$ 0
0
5
10
8
20
12
30
16
40
Explanation / Answer
12. Average Total cost = Average Fixed cost + Average Variablecost Average Fixed Cost = Average Total cost - Average Variablecost If we multiply the equation by quantity we get total costvalues Fixed cost = Total cost - Variable cost Fixed cost = $75 * 100 - $50 * 100 Fixed cost = $2500 So C is your answer
13. If a firm has no say in its price than it is a price takerand will have a horizontal demand curve. If the firm decides toincrease the price then people will simply go to other firms topurchase the goods. The answer is A
14. Although the table is not shown Diminishing marginalproduct is a result of a decrease in labor productivity asovercrowding or lack of resources are causes to Diminishingmarginal product.
15. Perfectly competitive firms confront a perfectly elasticdemand curve as individual firms cannot change the outcome of themarket. Monopolistically competitive firms face a downward slopingdemand curve because it is the only seller and if the monopolistwants to sell more they will have to lower prices. D is youranswer
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