5) The market demand for labor curve is correctly described by which of the foll
ID: 2440168 • Letter: 5
Question
5)
The market demand for labor curve is correctly described by which of the following?
(2pts)
It is steeper than the horizontal summation of all the individual firm demand for labor curves.
It is the horizontal summation of all the individual firm demand for labor curves.
It is the vertical summation of all the individual firm demand for labor curves.
It is one of the individual firm demand curves multiplied by the number of firms in the industry.
It is flatter than the horizontal summation of all the individual firm demand for labor curves.
6)
How will an decrease in the price of widgets affect the market for the labor used to produce those widgets?
(2pts)
There will be a movement down along the firm’s demand for labor curve.
There will be no effect on the firm’s demand for labor nor any movement along the curve.
There will be a movement up along the firm’s demand for labor curve.
The firm’s demand for labor curve will shift to the left.
The firm’s demand for labor curve will shift to the right.
7)
A firm’s demand for labor will be more elastic
(2pts)
the more elastic is the demand for the final product.
the larger the share of labor in the firm’s total cost of production.
the more good substitutes there are for labor.
in all the above cases.
in none of the above cases.
8)
A worker’s supply of labor curve will be upward-sloping in which of the following cases?
(2pts)
When the substitution effect of an increase in the wage rate is stronger than the income effect.
When the wage is very low.
When the worker is unemployed.
When the income effect of an increase in the wage rate is stronger than the substitution effect.
When there is no income effect.
Explanation / Answer
5. It is steeper than the horizontal summation of all the individual firm demand for labor curves.
A decrease in wage rate leads to an increase in demand for labor by all firms and thus production and supply of the output increases. This increase in good's supply leads to a decrease in its price and hence market labor demand increases by a small amount. Therefore, the market demand curve is steeper than the firm's labor demand.
6. The firm’s demand for labor curve will shift to the right.
A decrease in the price of a widget means it will be demanded more and hence the production of widget needs to be increased. This will lead to an increase in labor demand by all firms. A shift in labor demand curve to right means an increase in labor demand at same wage rate.
7. in all the above cases.
An elastic labor demand curve means labor demand is more responsive to change in the wage rate. This occurs when labor cost is a large share of total expenses, when the output produced using labor is price elastic and when the firm can easily substitute labor for other factors of production.
8. When the substitution effect of an increase in the wage rate is stronger than the income effect.
An upward labor demand curve shows that with an increase in wage rate, workers are ready to increase their working hours or labor supply is directly related to the wage rate.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.