AP Micro Unit 5 Homework

A monopsonistic labor market has a

• single employer of labor

• horizontal labor supply curve

• labor force of identically skilled workers

• backward bending labor supply curve

• demand curve for labor that is perfectly elastic

The graph above shows a monopsony labor market. In the absence of any regulations, which of the following represents the number of workers the firm will hire and the wage rate it will offer to those workers? 4MI52

• Number of Workers: 15, Wage Rate: $30

• Number of Workers: 20, Wage Rate: $20

• Number of Workers: 20, Wage Rate: $40

The marginal revenue product of labor is the 4MI53

• product price times the wage rate

• additional revenue a firm earns when it employs an additional unit of labor

• increase in the average product of labor when the firm employs an additional unit of labor

• increase in the price of labor when the firm employs an additional unit of labor

• marginal revenue plus product price

A contractor is employing labor and capital to build an office complex. At the current mix of inputs, the marginal product of labor is 30 square feet per day, and the marginal product of capital is 90 square feet per day. The price of labor is 3,000 per day. To hire inputs in a cost-minimizing way, the firm should 4MI54

• hire more labor and less capital

• hire less labor and more capital

• hire more labor and more capital

• hire less labor and less capital

• make no changes to the mix of inputs

ABC Limited, Inc., sells its product in a perfectly competitive market for a price of 75. Labor is the only factor cost, and the firm is currently earning profits. If ABC hires one more worker and output increases by 5 units per day, the firm's profits will

• decrease by $5

• decrease by $75

• increase by $75

• increase by $15

• remain unchanged

According to the information in the table above, the twelfth worker would increase the hourly profit by 4MI56.

• $0.20

• $1.10

• $1.30

• $2.40

• $5.20

A factor of production will NOT earn economic rent when its supply is 4MI57.

• elastic

• inelastic

• unit elastic

• perfectly elastic

• perfectly inelastic

A firm’s demand curve for labor is equal to a segment of its 4MI58

• average variable cost curve

• total revenue curve

• marginal cost curve

• marginal revenue product curve

• average product curve

The graph above shows the marginal revenue product curve and supply curve of labor for a firm. The introduction of new management techniques dramatically increases workers productivity. Which of the following changes is most likely to occur?

• The supply curve will shift to the left, increasing the wage rate.

• The supply curve will shift to the right, increasing employment.

• The marginal revenue product curve will shift to the right, increasing wage rate.

• The marginal revenue product curve will shift to the left, reducing employment.

• Neither the marginal revenue product curve nor the supply curve will shift, but the wage will increase and employment will fall.

Assume that firms providing health-care services to older people operate in a perfectly competitive market. What must happen in the market for health-care workers if there is an increase in the number of older people in a country? 4MI510

• The demand for health-care workers will increase.

• The marginal factor cost in the health-care industry will decrease.

• The number of health-care workers will decrease.

• The quality of health-care services will increase.

• The wages of health-care workers will decrease.