Exam 10: Input Demand: the Labor and Land Markets

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 W₀ and the firm is initially at Point A. Labor supply decreases from S₀ to S₁. The firm's MRP_L curve will shift from MRP_L at K₁ to MRP_L at K₂ because

Suppose the supply of labor schedule increases in a perfectly competitive labor market while the market demand schedule remains unchanged. A profit-maximizing representative firm will

If land becomes less valuable in residential use than in commercial use

Because a famous airplane like the Spruce Goose is fixed in supply, its price is

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 7 bushels. What would you advise this farmer to do?

The marginal product of labor is the additional revenue a firm earns by employing one additional unit of labor.

Input demand is derived demand in the sense that it is dependent upon the productivity of the input.

A competitive firm will use a factor of production as long as its marginal revenue product exceeds its unit cost.

Refer to the data provided in Table 10.3 below to answer the following question(s). Table 10.3 -Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 per worker per day. If the firm wants to maximize its profits, it should

If the MRP of land is less than its price, a firm should

The price of a good will be ________ determined if the ________ of the good is perfectly inelastic.

Salaries of NFL quarterbacks, like Tom Brady, are

A technological change would cause a shift of the demand curve for inputs.

Refer to the data provided in Table 10.3 below to answer the following question(s). Table 10.3 -Refer to Table 10.3. Marginal revenue product of the ________ worker is $1,000.

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 marginal revenue product of the ________ worker is $150.

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 $120.

Assume that automobiles are a normal good. An increase in income will

If labor markets are competitive, wages in those markets are determined by

Sally's Sandwiches produces sandwiches using one variable input-labor. Sally's Sandwiches is a ________ in the labor market and a ________ in the sandwich market.

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. Diminishing returns to labor start with the ________ worker.