Exam 12: The Markets for Labour and Other Factors of Production

Figure 12-2 Figure 12-2 shows the marginal revenue product for Becca's Baubles,a producer of hand-beaded bracelets. -Refer to Figure 12-2.Suppose the market price of bracelets falls to $2.What happens to the curve given in the diagram?

An increase in the supply of capital,which is a substitute to labour,will lead to a decrease in the demand for labour.

What is a compensating differential?

An increase in the price of grape juice causes an increase in the marginal revenue product of labour used to produce grape juice.

Wage differences among workers of different races and gender could be due to all of the following except

An increase in a perfectly competitive firm's demand for labour could be caused by

The market price of a factor of production that is in fixed supply is determined only by demand.

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit.Assume that labour is the only input.If hiring another worker would increase output by five units per hour,then to maximise profits the firm should

What is the substitution effect of a wage increase? What is the income effect of a wage increase? Under what conditions will a worker's labour supply curve become downward sloping?

If workers in nuclear power plants underestimate the true risk of their jobs

The demand for labour is different from the demand for final goods and services because

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

The substitution effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to consume goods and services.

Table 12-2 -Refer to Table 12-2.The marginal revenue product of labour from the third unit of labour is

In order for a labour supply curve to be backward bending at high wages,

Economic rent refers to the price of a factor of production which is fixed in supply.

Table 12-3 Hotspur Incorporated,a manufacturer of microwave ovens,is a price taker in its input and output markets.The firm hires labour at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80.Table 12-3 shows the relationship between the quantity of labour it hires and the quantity of microwave ovens it produces. -Refer to Table 12-3.What is Hotspur's profit maximising quantity of labour?

The firm's gain in profit from hiring another worker is

Why do professional basketball players earn more than police officers? Illustrate this situation graphically.

That some talented people may not enter an occupation because they have heard that people with their personal characteristics do not get hired in that occupation is known as