Exam 10: Input Demand: the Labor and Land Markets

The formula for the marginal revenue product of labor (L is for labor, X is the output) is

If a product's demand decreases as its supply simultaneously increases, the marginal revenue product curve will

An increase in technology will cause a marginal revenue product of labor curve to

If the marginal product of the last dollar spent on labor is less than the marginal product of the last dollar spent on capital, the firm can produce more output by spending less on capital and more on labor.

The Pet Emporium hires workers to bathe cats. The Emporium sells this service for $20. The marginal revenue product of this storeʹs fifth worker is $100. The marginal product of the fifth worker is

If product demand decreases and product price decreases,

A firm will continue hiring labor as long as the MRP of labor ________ the market wage rate.

The Package Store hires workers to wrap packages. The store sells this service for $5. The marginal revenue product of this store's fifth worker is $50. The marginal product of the fifth worker is

Labor is a firm's only variable input. The firm should hire additional units of labor as long as the wage is less than or equal to the marginal revenue product of that additional unit of labor.

Refer to the data provided in Table 10.2 below to answer the following question(s). Table 10.2 Total Labor Units (employees) Total Product (frames per day) Price per Frame 0 0 \ 10 1 10 \ 10 2 30 \ 10 3 55 \ 10 4 70 \ 10 5 82 \ 10 -Refer to Table 10.2. Marginal revenue product of the ________ worker is $250.

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. Figure 10.3 -Refer to Figure 10.3. The market wage is initially W₁ and the firm is initially at Point B. Labor supply increases from S₁ to S₀. If the firm does not change the amount of capital it employs, the firm will move to Point ________ to maximize profits.

Refer to the data provided in Table 10.1 below to answer the following question(s). Table 10.1 Total Labor Units Total Product Marginal Product of Price per (employees) (T-shirts per day) Labor (per day) T-shirt 0 0 - - 1 20 20 \ 5 2 50 30 5 3 75 25 5 4 95 20 5 5 110 15 5 -Refer to Table 10.1. The maximum payment to labor per day that this profit-maximizing T-shirt manufacturer would be willing to pay to hire five workers per day is

The value of land is determined in part by what firms and households are willing to pay for it.

Assume that labor is the only variable input and that the payment made to labor is denoted as W. The ________ can be stated as W/MC.

If the price of a unit of output for a perfectly competitive firm is $5 and the profit-maximizing condition is met, then MP_L/P_L = MP_K/P_K = MP_A/P_A will be equal to

If the wage rate is less than the marginal revenue product of labor, the firm should ________ to maximize profits.

Firms will employ an input up to the point where

You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $15.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?

For a firm to maximize profits, the marginal product of the last dollar spent on each resource must be equal.

Refer to the data provided in Table 10.2 below to answer the following question(s). Table 10.2 Total Labor Units (employees) Total Product (frames per day) Price per Frame 0 0 \ 10 1 10 \ 10 2 30 \ 10 3 55 \ 10 4 70 \ 10 5 82 \ 10 -Refer to Table 10.2. If workers are paid $150 per day, then the firm is profit maximizing when it hires ________ workers.