Exam 10: Input Demand: the Labor and Land Markets

You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $30.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?

If Tie-Dyed T-Shirts is currently employing labor so that the wage is greater than the marginal revenue product of labor, it must also be true that

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, and the farmer employs five workers. If the farmer is maximizing his profits, then the marginal product of the fifth worker is

The demand for ________ is a ʺderived demand.ʺ

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown Harlingen, Texas ________ an acre of land in downtown Chicago, Illinois.

The law of diminishing marginal returns explains why a marginal revenue product schedule

Bonita's Braidworks hires workers to braid hair. The store sells the service for $25 per customer. The marginal revenue product of this storeʹs fifth worker is $50. The marginal product of the fifth worker is

Rent depends on what the potential users of the land are willing to pay for it.

Liu's Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profits, this firm should

Tony's Lawn Service uses only one variable input, fertilizer. The firm's demand curve for fertilizer in the short run is the input's

Shifts in factor demand result from changes in

The marginal revenue product of labor is

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. If the payment to labor per day is $125, this T-shirt manufacturer is maximizing profits if he will hire ________ employees.

The supply of land is perfectly elastic.

Which of the following is related to the additional revenues business owners expect to enjoy as a result of hiring the employee?

In general, the production and use of capital ________ the productivity of labor and normally ________ wages.

Related to the Economics in Practice on page 221: Because land is demand determined, an acre of land in downtown San Francisco, California ________ an acre of land in downtown Knoxville, Tennessee.

Firms will hire additional workers only as long as the value of their product is less than the relevant market wage.

If the supply of labor increases, which of the following events will occur?

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