Ap Micro corrections 2

A firms demand curve for labor is equal to its

• Average variable cost

• Total revenue curve

• Marginal cost curve

• Marginal revenue product curve

if a firm is hiring a certain type of labor under purely competitive conditions:

• Its labor demand cure will be perfectly elastic at the market-determined wage rate

• The labor supply curve will lie above the marginal cost curve

• The labor supply and marginal labor cost curves will coincide and be up sloping

• The labor supply and marginal labor curves will coincide and be perfectly elastic

A firm operating in a purely competitive resource market ha a resource supply curve that is:

• Perfectly inelastic

• Perfectly elastic

• Highly inelastic

• Highly elastic

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profits by hiring labor until:

• Marginal revenue product is zero

• Marginal revenue product exceeds marginal resource cost by the greatest amount

• Marginal revenue equals marginal cost

• Marginal revenue product equals marginal resource cost

A profit-maximizing firm will:

• Expand employment if marginal revenue product exceeds marginal resource cost

• Reduce employment if marginal revenue product exceeds marginal resource cost

• Expand employment if marginal revenue product equals marginal resource cost

• Reduce employment if marginal revenue product equals marginal resource cost

In a monopsonistic labor market the employer will maximize profits by employing workers up to that point at which:

• The difference between the wage rate and marginal resource cost is at a maximum

• Marginal revenue product equals marginal resource cost

• The wage rate equals marginal revenue product

• The wage rate equals marginal resource cost

A monopsonisits wage cost in hiring an additional worker is the:

• Workers wage rate

• Workers wage rate plus the wage increases paid to all workers already employed

• workers wage rate adjusted for the lower price that must be charged for the extra output

• Marginal wage cost less the wage rate

A monopsonistic employers marginal resource cost curve:

• Is always more elastic than the labor supply curve

• Coincides with the labor supply curve

• Is highly inelastic

• Lies above the supply curve because the higher wage to an additional worker must also be paid to all other employed workers