AP Microeconomics Unit 5

What is the rule to profit maximize when hiring workers?

• MR = MC

• MRC = MRS

• MRP = MRC

• S = D

What is the shape of the supply curve for labor if the firm is hiring in a perfectly competitively market?

• horizontal

• perfectly horizontal

• Vertical

• Downward sloping

What is MRC?

• Marginal Revenue Cost

• Marginal Resource Counting

• Marginal Resource Cost

• Mad, Risky, Customers

A monopsony pays _____ & hires ____ workers than a perfectly competitive market.

• fewer & the same

• more & more

• less & less

• the same & fewer

In a perfectly competitive labor market, an increase in an effective minimum wage will result in:

• an increase in the supply of workers 
• a decrease in the supply of workers 
• a decrease in the demand for workers 
• fewer workers being hired 

The table shows the production function of an auto parts manufacturer. Assume that the firm can hire as many workers as it wants at the market wage rate of $600 per week per worker and sell as many auto parts as it wants at the price of $10 per part. To maximize profits, the firm should hire: 

• 1 worker
• 3 workers
• 5 workers
• 7 workers

Assume that firms sell their output in a perfectly competitive product market and hire labor in a perfectly competitive labor market. If all other factors remain constant, an increase in the demand for the firms’ product will result in which of the following changes in the labor market? 

• The demand curve for labor will shift to the right. 
• The supply curve for labor will shift to the right. 
• The supply curve for labor will shift to the left. 
• The demand curve for labor will shift to the left. 

If a large number of unskilled workers enter the labor market, which of the following is most likely to occur in the labor market for unskilled workers? 

• The supply curve will shift to the right and the wage rate will decrease. 
• The supply curve will shift to the left and the wage rate will increase. 
• The demand curve will shift to the right and the wage rate will increase. 
• The demand curve will shift to the left and the wage rate will decrease. 

Assume that a profit-maximizing, perfectly competitive firm hires labor in a perfectly competitive labor market. If the market wage is $12 per hour and the price of the product is $3 per unit, the firm will:

• hire more workers if each worker can produce 3 units per hour 
• hire another worker if the output per hour of the additional worker exceeds 4 units 
• hire fewer workers, since the hourly wage exceeds the cost of producing one unit of output 
• not hire any workers, since the cost of labor is greater than the price of the output 

The last worker currently employed by a firm has a marginal product of 3 units per hour and is paid $20 per hour. Assuming that both the
labor market and product market are perfectly competitive and that the product’s price is $5 per unit, the firm should do which of the following? 

• Increase the product’s price 
• Increase wages
  
• Employ more workers
  
• Employ fewer workers