Labor Market Test

Question 1

MP

Answer 1

Change in total product

Question 2

TR

Answer 2

MR + next MR

Question 3

MR

Answer 3

Change in total revenue

Question 4

Price

Answer 4

TR/TP

Question 5

Profit max =

Answer 5

One

Question 6

Least costly=

Answer 6

Both ratios equal each other

Question 7

Ratio for least costly

Answer 7

MP/price

Question 8

Ratio for profit max

Answer 8

The Mrp/price (the one that is the same as price)

Question 9

Substitution effect

Answer 9

Machinery price goes down so firms use more machinery than labor; production costs decrease and output decreases so demand increases

Question 10

Output effect

Answer 10

Since the demand for the product increased the demand for labor increases

Question 11

Net effect

Answer 11

Since output and substitution are opposites the stronger one will win out

Question 12

Explain a monopsony graph

Answer 12

Because worker’s skills aren’t transferable the firm can hire less workers at lower wages than society would like

Question 13

Explain the derived demand(demand enhancement) graph

Answer 13

Workers drive up demand through ads, feather bedding, etc. So they hire more workers at higher wages

Question 14

Explain the craft/ exclusive Union

Answer 14

Workers limit the labor supply by making it harder to join the profession through required professional licensing which causes less workers and higher wages

Question 15

Explain the industrial/inclusive Union

Answer 15

Workers refuse to work below a certain wage rate they hire fewer workers at a higher wage than the firm would like creates a surplus of workers

Question 16

Explain a bilateral monopoly

Answer 16

A bilateral monopoly is the price difference that occurs between the industrial union and monopsony. Monopsony wants to give lower wages and union wants higher wages. The disagreement is solved through collective bargaining

Question 17

What is MRP?

Answer 17

Demand for workers

Question 18

What is MRC?

Answer 18

The wage

Question 19

What are characteristics of a PC labor market?

Answer 19

Many small firms are hiring workers that have identical skills, the wage rate is constant, workers are wage taker

Question 20

Why is a PC demand curve down sloping?

Answer 20

Diminishing productivity

Question 21

MRP=

FOR PC ONLY

Answer 21

MP times price

Question 22

What is derived demand?

Answer 22

Jobs that are only jobs because of the product that they produce

Question 23

Characteristics of an imperfect competition labor market?

Answer 23

Price isn’t constant,MRC above supply curve

Question 24

Why is an imperfect competition down sloping?

Answer 24

Diminishing marginal productivity and they have to lower the price to sell the next unit

Question 25

MRC=wage rate MRP= MRC FOR WHAT?

Answer 25

IMPERFECT COMPETITIN LABOR MARKETS

Question 26

Change in demand is proportional to change in demand curve

Answer 26

Increase demand= curve to the right | Decrease demand= curve to the left

Question 27

Adding machinery to labor=

Answer 27

Increased productivity

Question 28

The better the Machinery is, the more

Answer 28

Productive the firm will be

Question 29

Improvements to the quality of resource will

Answer 29

Increase marginal productivity

Question 30

A change in price will make demand change in the opposite direction so

Answer 30

Price goes up, labor goes down | Price goes down, labor goes up

Question 31

TP

Answer 31

MP + next MP

Question 32

An elasticity less than one is

Answer 32

Inelastic

Question 33

Measuring the elasticity is measuring what?

Answer 33

The sensitivity in change in demand(MRP)

Question 34

The total cost ratio

Answer 34

If labor is the only cost then a 20% raise=20% increase If labor is half the cost than 20% raise=10% increase

Question 35

Why do we study resource pricing?

Answer 35

Money income determination, resource allocation, cost munimization, ethical questions

Question 36

Quantity demand is

Answer 36

One point on the curve

Question 37

Demand is

Answer 37

The whole demand curve

Question 38

Change in wage changes

Answer 38

Quantity

Question 39

Change in resource demand causes

Answer 39

A shift is demand curve