Exam 11: Input Markets and the Allocation of Resources

Average revenue product of an input is:

The firm's labour demand curve is given by:

The value of an input to a firm depends in part on the:

Which of the following is not an assumption of perfectly competitive input markets?

For a monopsony buyer, the marginal expenditure per unit of an input:

In a competitive market, firms value inputs:

If a wage change makes the wage greater than an input's maximum Average Revenue Product, a firm will:

The assumption of perfect mobility of resources in perfectly competitive input markets implies that

Figure 11A -In Figure 11A, the individual's Indifference curve is:

If a firm is perfectly competitive in its input markets, then, in short- run equilibrium:

A firm is likely to be a monopsonist if:

The firm's labour demand curve is given by:

Suppose there are two goods, consumption C with price p = 1 and leisure L with price w = 8. The endowments of the two goods are given by C₀ = 0 and L₀ = 2 4. The utility function is U(C,L)= logC + 2logL. i)How much labour should be supplied and how much consumption should be chosen? ii)Using all the information given above (except w = 8), show that the amount of labour supplied will be the same regardless of the wage rate. What must be true about income and substitution effects for this to occur?

The supply of labour bends backward because as the wage rate becomes very high:

Figure 11A -In Figure 11A, the individual's human capital production function is:

In general, the supply functions of intermediate inputs reflect the:

If the input market is competitive and the output market is monopolistic:

In long- run equilibrium a firm that is a perfect competitor in its input and output markets will choose an input bundle such that for each input:

True/False. If the supply of labor is downward sloping, leisure must be an inferior good.

In general, the demand functions for primary inputs reflect the: