Exam 14: Markets for Factor Inputs

In the United States, major league baseball is exempt from antitrust laws. Before 1975, the baseball team owners agreed to hold an annual draft of amateur baseball players. Once the players were drafted and signed by a team, they were effectively tied to that team for life. Before 1975, professional baseball players were paid:

Which of the following is TRUE concerning equilibrium in a monopsonistic factor market?

Suppose a firm has one variable input, labor. Why is the MRP_L curve for a competitive firm above the MRP_L curve for a monopolist?

Labor is typically assumed to be the only variable input in very short-run production systems, and the number of variable inputs increases as we lengthen our planning horizon from short run to long run. What happens to the labor demand curve as we move from short run to long run?

The marginal product of labor at One Guy's Pizza is MP_L(L) = . One Guy's pays each unit of labor the minimum wage of $6.00. Also, One Guy's can sell all the pizza it produces for $12. What is the optimal level of labor employment for One Guy's pizza? If the minimum wage is raised to $8, what impact will this have on One Guy's optimal labor employment level?

In a competitive labor market, with one variable factor, the supply of labor to the firm is

Scenario 14.4: John's firm is a competitor in your product market and a monopsonist in the labor market. The current market price of the product that your firm produces is $2. The total product and marginal product of labor are given as: TP = 100L - 0.125L² MP = 100 - 0.25L where L is the amount of labor employed. The supply curve for labor and the marginal expenditure curve for labor are given as follows: L = P_L -5 ME_L = 2L + 5 -Refer to Scenario 14.4. Suppose that a subsidy is implemented on each unit of labor hired. Then the number of workers hired

Scenario 14.4: John's firm is a competitor in your product market and a monopsonist in the labor market. The current market price of the product that your firm produces is $2. The total product and marginal product of labor are given as: TP = 100L - 0.125L² MP = 100 - 0.25L where L is the amount of labor employed. The supply curve for labor and the marginal expenditure curve for labor are given as follows: L = P_L -5 ME_L = 2L + 5 -Refer to Scenario 14.4. Suppose that a tax is imposed on each unit of the product that John produces. Which curve will shift?

Scenario 14.4: John's firm is a competitor in your product market and a monopsonist in the labor market. The current market price of the product that your firm produces is $2. The total product and marginal product of labor are given as: TP = 100L - 0.125L² MP = 100 - 0.25L where L is the amount of labor employed. The supply curve for labor and the marginal expenditure curve for labor are given as follows: L = P_L -5 ME_L = 2L + 5 -Refer to Scenario 14.4. Suppose that a pollution tax is imposed on each unit of a firm's output. The number of workers hired

Other things being equal, the marginal revenue product (MRP) curve for a competitive seller

In some remote communities, there was only one employer in the local labor market several years ago, but the number of firms that hired workers in the market increased over time. What is the expected change in the local labor market as the number of employers increased (ceteris paribus)?

Umberto has a monopoly in providing taxicab services in the local market. The relevant marginal revenue of taxicab sales as a function of labor employment is: MR(L) = 10 - L. The marginal product of labor in providing taxicab services is 50. Umberto is a price taker in the labor employment market and the market price of labor is $15. Determine Umberto's optimal employment of labor.

In the situation involving a bilateral monopoly, a

A major computer software company maintains a technical support center in a rural area and is the only employer in this region. Suppose the local labor supply curve shifts leftward due to net migration of workers from the area. What happens to the equilibrium outcome in this labor market?

The marginal product of labor at Ronald's Outboard Motor Manufacturing plant is MP_L(L) = Ronald can sell every unit of output he produces for $100. Determine Ronald's marginal revenue of the product of labor. If Ronald can hire all the labor hours he would like at $15, calculate Ronald's optimal employment level. If the wage rate falls to $10, calculate Ronald's new level of employment.

In general, does the demand for labor become more or less elastic as we increase the number of other variable inputs used in a production process?

When the factor market is purely competitive, the firm's average expenditure curve for a factor of production is

An increase in technology in fabric design changes Trisha's marginal product of labor function from MP_L (L) = 0.5 - 0.01L to MP'_L(L) = 0.625 - 0.01L. If Trisha can sell all the output she desires at $120 and she must pay each unit of labor she employs $24, what effect does the change in technology have on labor employment?

The marginal product of labor at Trisha's Fashion Boutique is MP_L (L) = - 0.01L. Trisha can sell all the output she can produce for $100 a unit. If Trisha pays a wage rate of $20 per unit of labor, calculate Trisha's optimal labor employment level. If the wage rate rises to $25 per unit, what happens to Trisha's optimal employment level?

Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a