Topic 2 - Part 1 - 2156B001

The short-run demand curve slopes downward because

• of the law of diminishing returns to labour

• of the law of diminishing marginal utility

• of the wage elasticity of labour demand

• the labour supply curve slopes upward

What is the behavioural force that underlies the demand curve for labour

• Market share maximizing behavior on the part of firms

• Utility maximizing behaviour on the part of workers

• Revenue maximizing behaviour on the part of firms

• Profit maximizing behaviour on the part of firms

In the short run, the demand for labour for a competitive firm is:

• the marginal product of labour curve

• the downward sloping portion of the value of the marginal product curve

• perfectly elastic at the market wage

• perfectly inelastic at the market wage

Consider a firm that seeks to minimize the cost of producing a given level of output. Which of the following statements is true?

• In equilibrium, the marginal product of labour is equal to the marginal product of capital.

• In equilibrium, the ratio of input prices equals the marginal rate of technical substitution.

• In equilibrium, the wage rate equals the slope of the isoquant.

List one of the determinants of the elasticity of demand for labour.