Chapter 15

Question 1

perfect competitive

Definition of Value of marginal product (VMP)

Answer 1

The value at current market price of the extra output produced by an additional unit of input
( VMP_L = P x MP_L )

Question 2

imperfect competitor

Definition of marginal revenue product of labour (MRP_L)

Answer 2

The amount by which total revenue increases with the employment of an additional unit of input

( MRP_L = deltaQ/deltaL * deltaTR/deltaQ = deltaTR / deltaL )

Question 3

Definition of Average factor cost

Answer 3

Another name for the supply curve for an input

Question 4

Definition of total factor cost (TFC)

Answer 4

The product of the employment level of an input and it’s average factor cost

Question 5

Definition of marginal factor cost (MFC)

Answer 5

The amount by which total factor cost changes with the employment of an additional unit of input

Question 6

If a firm is employing 0 units of capital it would imply that the labor is…

Answer 6

…Cheap! (stop being a dumbass)

Question 7

In a perfectly competitive firm the short run demand for labour is…

Answer 7

…downward sloping because of the law of diminishing returns

Question 8

The question of how many hrs shld I work can be answered with…

Answer 8

An indifference map. Of income and leisure time!

Question 9

Why ain’t leisure a Giffen good

Answer 9

If the labour supply curve is backward bending, leisure can NOT be an inferior good and since
Only inferior goods are giffen goods leisure cannot be a Giffen good

Question 10

Wuz the goal of welfare choom????

Answer 10

The goal of welfare is to provide addition eddies (income) to the chooms that won’t doin too good (the poor)