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Exam 12: Factor Markets

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Question 21

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In a monopsonistic input market the marginal cost of another unit of an input is equal to its price because it is assumed that as the firm has to pay a higher price for one more unit of input, it must pay the same price for all units of input.

A) True
B) False

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Question 22

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The marginal revenue product of input a is equal to the net marginal revenue of input a multiplied by the marginal product of input a. True

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B) False

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Question 23

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The marginal cost of an input is equal to the change in the firm's total cost that results from employing the number of units of the input necessary to produce one more unit of output.

In a monopsonistic input market the marginal cost of another unit of an input is greater than its price because it is assumed that:

Using the following information to complete questions 8 - 11. Top-It-Off Inc. produces gold pen and pencil sets for executives' desks. Revenue and labor productivity data are given in the following table. The components cost $15.00. The wage rate is constant at $7.50 per hour. -Given the above information, what is the Net Marginal Revenue?

The term which is used to describe a market structure where there are many buyers of a differentiated product is:

The net marginal revenue of input "a" multiplied by the marginal product of input "a" is equal to the:

The profit-maximizing rule for employment of a variable input in a monopsonistic input market is to employ that input until:

Using the following information to complete questions 8 - 11. Top-It-Off Inc. produces gold pen and pencil sets for executives' desks. Revenue and labor productivity data are given in the following table. The components cost $15.00. The wage rate is constant at $7.50 per hour. -Given the above information, how many workers should Top-It-Off employ?

Using the following information, complete questions 12 - 15 A manufacturer of inexpensive toys operates in a city that offers significant tax benefits in order to entice new businesses to set up shop. The firm has the relationship between the number of workers per hour and the total product per hour shown in the following table. The relationship between output produced and per hour and the price at which it can be sold is also given. Assume that the cost of materials used in each toy is $.05. Because of local tax credits resulting from operating in this specific city, the firm's effect wage rate is $2.00 per hour. -Given the above information, what is the firm's Arc Marginal Revenue Product of Labor?

The profit-maximizing rule for employment of a variable input is to employ that input until its marginal revenue product is equal to the marginal cost of the input, as long as the marginal cost of the input would be at least equal to or above the marginal revenue product of the input for a greater quantity of the input.

Monopsonistic competition is the term we use to describe a market structure where there are many buyers of a differentiated product.

A sunglasses manufacturer has the relationship between the number of workers per hour and the total product per hour shown in the following table. The relationship between output produced per hour and the price at which it can be sold is also given. Assume that the cost of materials used in each pair is $1.50. a. Complete the table. b. If the wage rate is $9.00 per hour, how many workers should the firm hire to maximize profits? Why?

A firm has the following short run total product curve: where labor, L, is the only variable input and TP_L is the total output produced per day. a. If the firm is operating in the short run with K fixed at K = 5, the average price for a unit of its output is $5.00, and average raw materials cost per unit is $3.00, what is the equation for the marginal revenue product of input L? b. If the firm must pay a market-determined wage rate of $90.00 per day for each unit of labor hired, how much labor should it employ? c. How many units of output will be produced per day? Fractional units are not permitted - round UP to the next whole unit.) d. If the firm's daily fixed costs total $118.00, what will be its total profit per day?

The profit-maximizing rule for employment of a variable input is to employ that input until its marginal revenue product is less than the marginal cost of the input, as long as the marginal cost of the input would be less than or at most equal to the marginal revenue product of the input for a greater quantity of the input.

The general profit-maximizing rule for employment of a variable input is to employ that input until its marginal revenue product is equal to the marginal cost of the input, as long as:

Suppose that the total product of labor per Hour) for a firm is given by: TP_L = 26L - .5L² a. Find the MP_L function. b. How many workers should the firm employ if the wage rate is $25.00 per hour and the NMR_L is $25.00?

Using the following information, complete questions 12 - 15 A manufacturer of inexpensive toys operates in a city that offers significant tax benefits in order to entice new businesses to set up shop. The firm has the relationship between the number of workers per hour and the total product per hour shown in the following table. The relationship between output produced and per hour and the price at which it can be sold is also given. Assume that the cost of materials used in each toy is $.05. Because of local tax credits resulting from operating in this specific city, the firm's effect wage rate is $2.00 per hour. -Given the above information, how many workers should the toy company employ?

The following table shows worker, quantity of output, and output price information for a manufacturer of 10-key calculators. The cost of materials used in each is $4.00. a. Complete the following table. b. How many calculators should the firm produce to maximize profits if the wage rate is $6.00 per hour? Why?

The net marginal revenue of input a is equal to the marginal revenue received from selling one more unit of output less the cost of raw materials and intermediate products required for it.