Unit 5 - Resource Market

Suppose the demand for peppers is rising. How will this affect the demand for pepper pickers, the wage for pepper pickers, and the employment in the pepper picker labor market?

DEMAND...WAGE...EMPLOYMENT

• INCREASE/INCREASE/DECREASE

• INCREASE/DECREASE/INCREASE

• INCREASE/INCREASE/INCREASE

The economony is in a recession, and consumer speending for large appliances (such as refrigerators) has fallen. At the factories that produce these large appliances, we expect the demand for workers to _____________ and the wages for these workers to _____________.

• decrease; increase

• decrease; decrease

• increase; decrease

Because the demand for labor is a function of the demand for the goods produced by the labor, labor demand is referred to as

• a derived demand

• a complementary demand

• an elastic demand

• an inelastic demand

Which of the following would cause both wages and employment in the market for autoworkers to increase?

• a strong stock market

• an increase in the price of gasoline

• an increase in the demand for cars

• a growing size of the labor force

Suppose that Jerry produces crunks and is employing six workers at the current market wage. If market demand for crunks rises and increases the price at which Jerry can sell them, how will this affect Jerry's demand for labor?

• The MRP curves shifts left, increasing employment at the current market wage.

• The MRP curve shifts right, increasing employment at the current market wage.

• The MRP curve shifts right; decreasing employment at the current market wage.

• The MRP curve shifts left, decreasing employment at the current market wage.

Suppose a firm employs only labor at the market wage of W and capital at the market rate of R. To hire the least-cost combination of labor and capital, which of the following conditions must apply?

• MPL MPK

  ------ = ------

  W R

• MPL MPK

  ------ > ------

  W R

• MPL W

  ------ = ------

  MPK R

• MPL - MPK

Sarah employs labor at a wage of $20 and capital at a rate of $10. Currently the MP of labor is 5 units and the MP of capital is 2 units. Can Sarah adjust her combination of labor and capital to decrease her costs of producing the same level of output?

• Yes, she should decrease her employment of both

• No, she is already hiring the optimal combination

• Yes, she should increase her employment of labor and decrease her employment of capital

• Yes, she should decrease her employment of labor and increase her employment of capital

Ricky has chosen the least-cost combination of labor and capital to produce 1,000 units of output. If the price of capital falls, we expect Ricky to increase his employment of _________________, decrease his employment of _________, and see his capital-to-labor ratio (K/L) _____________.

• labor; capital; fall

• capita; labor; not change

• labor; capital; unchange

• capital; labor; rise

An effective minimum wage in a competitive labor market creates a ______________ of labor because at the minimum wage _____________.

• surplus; the quantity of labor demanded exceeds the quantity of labor supplied

• shortage; the quantity of labor demanded exceeds the quantity of labor supplied

• surplus; the quantity of labor supplied exceeds the quantity of labor demanded

• shortage; the quantity of labor demanded equals the quantity of labor supplied

When a factor market has only one demanded of labor, the market is labeled

• a natural monopoly

• a labor union

• a competitive market

• a monopsony