Exam 11: Input Markets and the Allocation of Resources

A firm's short- run demand function for some input will shift up if:

A firm which is a monopolist in its output market and a monopsonist in an input market is:

Figure 11A -In Figure 11A, the individual's Production possibility frontier is:

Joanna currently gets $1000 weekly in investment income, and she works 10 hours each week at $50 an hour. Leisure is neither inferior nor a normal good for Joanna. Assume she is free to choose her hours of work. If offered a choice between a 10% increase in her investment income and a 20% increase in her hourly wage, then Joanna will choose the increase in wage.

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

In long- run equilibrium, for a firm which is a monopolist in its output market and a perfect competitor in its input markets:

A perfectly competitive input market:

If a firm is a competitor in its output market and a competitor in an input market, its input bundle will be chosen so that:

A firm uses one variable factor, labour, which it buys as a monopsonist, to produce a single output. It sells the product in a perfectly competitive market. The firm's production function is: Y = - 7L² + 200L where Y is daily output in units and L is the number of workers employed. The output is sold at $.5 (50 cents)per unit. The supply of labour to the firm is: w(L)=28 + L i)What is the number of workers employed ? What is the wage per worker? ii)Calculate the deadweight loss;

Assume that the demand for labour is given by the inverse demand curve W = 5 - 0.1L where W is the nominal wage and L is the number of hours worked. Assume that the inverse supply curve of labour is W = 0.1L. In this case, the MC of labour is W = 0.2L. i)Find the equilibrium wage and employment under perfect competition. ii)Find the equilibrium wage and employment under monopsony. iii)Assume that the government enacted a minimum wage where W = $10. Find the equilibrium wage and employment.

If a resource is nonexhaustible, its supply curve in a single period is:

the own price elasticity of demand for imports is not dependent upon which of the following?

If the VMP of an input for a competitive firm is downward sloping, then:

Consider the following production function for a firm using two inputs x and y, Q=20x+14y- 2x²+2xy- y² where q denotes the quantity of output that is produced. The marginal (physical)product of x is:

Suppose in a small community workers can find employment in two industries: Clothing and Steel. In the Clothing industry, the marginal product of labor is always 1. In the Steel industry, the marginal product of labor is 12L_S^.5 -2, where L_S is the total number of workers employed in the Steel sector. The total supply of labor in this community is fixed at L_C +L_S =25, and the output price is 1 for both Clothing and Steel. a)Suppose that the labor market is perfectly competitive. How many workers will be employed in the Clothing sector, and how many in the Steel sector? b)What wage rate will workers in each sector receive?

The marginal revenue product is:

In the long run, a firm's demand curve for a resource is:

Firms will hire labor up to the point where