Review Session 1 - 2156

An increase in non-market income will have which of the following effects?

• An upward shift in the income constraint

• A downward shift in the income constraint

• A clockwise rotation in the income constraint, making it steeper

The slope of the indifference curve at the lower right-hand corner of the income/leisure diagram, where zero hours are supplied to the labour market, is equal to:

• The prevailing market wage

• The reservation wage

• The level of non-market income

• The slope of the budget constraint

In the long run, which of the following statements is false?

• MPL/MPK=w/r

• MPL=MPK

If the value of the marginal product of labour exceeds the wage, then employing another worker

• Increases profit

• Increases the marginal product of labour

• Increases the value of the marginal product of labour

• Cuts costs

Lara's hourly wage falls from $15 to $7.7, her budget line

• shifts up without changing its slope

• gets flatter, pivoting through the vertical intercept

• gets flatter, pivoting through the vertical intercept

• gets steeper but continues to cut through his endowment point

In a situation of a monopsonistic firm, if the government impose a minimum wage which is higher than the equilibrium wage level of the monopsonist. The new equilibrium employment level is:

• The same as before

• indeterminate

• greater than before

• smaller than before

After the imposition of minimum wage, monopsonist's profit will:

• increase

• decrease

• remain the same

• equal to zero