Transcript According to the law of diminishing marginal returns

According to the law of diminishing marginal returns
a)
b)
c)
d)
the marginal product of labor is negative.
the average product of labor is negative
as more labor is added to a fixed stock of capital, less
output is produced
as more labor is added to a fixed stock of capital, the
marginal product of labor eventually will decline.
What is the marginal revenue product of the third worker?
a)
b)
c)
d)
$18
$57
$72
$342
Labor
1
2
3
4
5
6
Output Output Price
10
$20.00
15
19.00
19
18.00
22
17.00
24
16.00
25
15.00
The table above shows the short-run production relationship and the product
demand schedule for a firm
How many workers will this firm hire if the wage is $10?
a)
b)
c)
d)
3
4
5
6
Labor
1
2
3
4
5
6
Output Output Price
10
$20.00
15
19.00
19
18.00
22
17.00
24
16.00
25
15.00
The table above shows the short-run production relationship and the product
demand schedule for a firm
Which of the following can be predicted to increase the
demand for labor?
a) An increase in the price of a gross
substitute for labor
b) A increase in the price of a gross
complement in production
c) A decrease in product demand
d) A decrease in the number of firms
As a result of an increase in the market supply of labor, suppose the wage rate falls by 10%.
After adjusting their employment levels, firms in the market find that their total wage bills
(=WxL) have increased. This result indicates that:
a)
b)
c)
d)
labor demand is inelastic over this range of
wage rates
labor demand is elastic over this range of wage
rates.
labor demand, was inelastic at the old wage,
but is elastic at the new, higher wage.
labor demand, was elastic at the old wage, but
is inelastic at the new, higher wage.
Suppose workers in labor market X are qualified to work in an alternative labor market
Y and vice-versa. If an increase in labor demand causes an increase in the wage rate to
workers in market Y, this will tend to:
a)
b)
c)
d)
increase labor supply and reduce the
wage rate in X.
increase labor demand and reduce the
wage rate in X
reduce labor supply and increase the
wage rate in X
reduce labor demand and reduce the
wage in X.
A monopsonist tends to hire too _____ workers because ______:
a)
b)
c)
d)
few; marginal revenue product exceeds the
value of marginal product.
few; marginal wage costs exceeds the wage
rate
many; marginal revenue product exceeds
the value of marginal product
many; marginal wage costs exceeds the
wage rate.
At wage rate W1 there is an:
a)
b)
c)
d)
excess supply of labor and the wage rate will fall
excess supply of labor and the wage rate will rise
excess demand for labor and the wage rate will fall
excess demand for labor and the wage rate will rise
For the supply and demand curves in the diagram, the level of
employment will be highest at
a)
b)
c)
d)
wage rate W1
a wage rate higher than W1
wage rate W2
a wage rate lower than W2
The employer’s share of the Social Security and Medicare components of the
payroll tax has increased, from 6.13% in 1980 to its current rate of 7.65%. Because
employers pay no payroll tax on many fringe benefits, this change in tax rates has
effectively
a)
b)
c)
d)
reduced the "price" of fringe benefits, rotating the wagefringe isoprofit line inward
increased the "price" of fringe benefits, rotating the wagefringe isoprofit line inward
reduced the "price" of fringe benefits, rotating the wagefringe isoprofit line outward
increased the "price" of fringe benefits, rotating the wagefringe isoprofit line outward
The principal-agent problem arises primarily because
a)
b)
c)
d)
principals and agents work in a team, leading to
free-rider problems
principals and agents have common interests
principals and agents have common interests
agents pursue some of their own objectives that
may conflict with the objectives of the principals
Compensation paid in proportion to the value of sales best
describes
a)
b)
c)
d)
piece rates
time rates
commissions
bonuses
A firm might choose to pay its employees a wage higher than
that which would clear the market because:
a) the higher wage raises the opportunity
cost of shirking
b) the higher wage may shift the labor
demand curve to the left
c) the firm will have higher turnover,
allowing new workers to invigorate the
work place
d) the higher wage solves the free-rider
problem
Which one of the following conditions is required for
allocative efficiency?
a) Marginal revenue product exceeds the
value of marginal product by the
greatest amount
b) Marginal revenue product equals the
wage rate
c) Value of marginal product equals the
marginal wage cost
d) Value of marginal product is the same in
all alternative employments of labor