Factor Market and Externalities

In the monopsonistic labor market shown in the diagram, which of the following indicates the number of workers the firm will hire and the wage rate it will pay, respectively? 

• L1, W1
• L1, W3
• L2, W2
• L1, W2

A firm produces truffles by using labor and capital. The price of labor is $10 per unit, and the price of capital is $20 per unit. At current output level, the marginal product of labor is 40 truffles and the marginal product of capital is 60 truffles. To reduce the total cost of producing the current quantity, how should the firm change its spending on labor and capital?

• Labor: no change
  Capital: increase
• Labor: no change
  Capital: no change
• Labor: increase
  Capital: decrease
• Labor: decrease
  Capital: increase

In the diagram, what would be the competitive quantity of workers hired and wages, respectively?

• L2, W4
• L1, W3
• L2, W2
• L1, W2

The graph shows the conditions that a monopsonist faces in a labor market. How many workers would this monopsonist hire and what wage rate would it pay, respectively? 

• 5, $37.50
• 10, $30
• 10, $20
• 14, $24

An entrepreneur is employing labor and capital to produce a product. The wage rate is $8 per unit and the rent for capital is $10 per unit. The marginal product of labor is 40 units and the marginal product of capital is 60 units. To minimize costs without changing its output, the firm should: 

• make no changes
• employ less labor and less capital
• employ more labor and less capital
• employ less labor and more capital

The Least-Cost Rule for employing two resources is?

• MR = MC

• MRP = MRC

• MU of labor / price labor = MU of capital / price of capital

• MRP of labor / price of labor = MRP of capital / price of capital =1

MP x Price equals

• MRC

• MRP

• MR

• ATC

worker 3 adds 20 units of production. Each unit sells for 10 dollars. What is the MRP of worker 3?

• 20

• 200

• 2000

• 2

According to the table, this firm should hire 3 workers.  Why is that true?

• MRP>MRC
• MP>MP
• MRP=MRC
• TP is positive

Derived demand refers to:

• The demand for resources used to make a good or service.
• The supply of resources used to make a good or service.
• The demand for a product produced with specific resources.
• The supply of a product produced with specific resources.