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Exam 11: Labor Markets

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Question 61

Multiple Choice

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A monopsonist's marginal factor cost (MFC) curve lies above its supply curve because the firm must:

A) lower the product price to sell more.
B) increase the price of its product to sell more.
C) decrease the factor price to hire more.
D) lower the factor price to hire more.
E) none of these.

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Question 62

Multiple Choice

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Wage and MFC differ for a monopsonist because:

A) the monopsonist is forced to pay a wage greater than the worker's MFC.
B) the monopsonist must accept the market wage rate.
C) workers are not as efficient when employed by a monopsonist.
D) any wage increase applies to all workers, not just to the next hired.
E) wage rate decreases force workers to work longer hours.

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Question 63

Multiple Choice

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In a labor market with one employer, the MFC is:

Which of the following type of firm is not a price taker in the market in which the firm buys its inputs?

Assume Ajax Company employs 100 workers and total revenue is $400,000 per week. When Ajax Company employs 101 workers, total revenue is $405,000. The marginal revenue product of the 101st worker is:

Exhibit 11-2 Labor and output data $\begin{array} { | c | c | } \hline \text { Labor } & \text { Output } \\\hline 0 & 0 \\1 & 20 \\2 & 45 \\3 & 80 \\4 & 100 \\5 & 110 \\\hline\end{array}$ -In Exhibit 11-2, the marginal product of the 3rd unit of labor is equal to:

If the wage rate is fixed at a certain level, the:

Explain why a monopsonist's marginal factor cost curve must lie above its labor supply curve.

Describe the factors that could cause an increase in the wage rate of workers.

Union membership as a percentage of the civilian labor force is lower in the United States than in Germany or Japan.

BigBiz, a local monopsonist, currently hires 50 workers and pays them $6 per hour. To attract an additional worker to its labor force, BigBiz would have to raise the wage rate to $6.25 per hour. What is BigBiz's marginal factor cost?

For a monopsonist:

For a perfectly competitive firm, marginal revenue product is equal to:

A union may negotiate limits on workload in order to increase the demand for labor and raise workers' salaries. This practice is known as:

Given the same marginal revenue product (MRP) and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be:

Exhibit 11-12 A monopsonist -In Exhibit 11-12, at the profit-maximizing level of employment, the firm's MFC is equal to ____ and the firm's MRP is equal to ____.

An increase in the demand for a product will shift the demand for labor used to produce the product:

Exhibit 11-10 Labor and wage rate data $\begin{array} { | c | c | } \hline \text { Labor } & \text { Wage } \\\hline 6 & \$ 12 \\7 & 13 \\8 & 14 \\9 & 15 \\10 & 16 \\\hline\end{array}$ -In Exhibit 11-10, the total wage cost of hiring 7 employees is:

If a town has a monopsony, this means:

Tucker Corporation sells its product for $5.00. Tucker's industrial engineers have informed management that hiring one additional worker will increase output by five units per hour. Tucker should hire the additional worker only if the wage rate is: