Question 1

Which of the following best describes 'derived demand' in the context of the labor market?

Accepted Answer

The demand for labor that arises from the market's demand for the firm's product.

Question 2

A firm maximizes profit by hiring workers up to the point where:

Accepted Answer

$$VMPL = W$$

Question 3

Suppose Tom's marginal product is 5 units and the price of output increases from $$10 to 15. $$What is the change in Tom's value of marginal product of labor (VMPL)?

Accepted Answer

$$VMPL$$ increases from $$50 to$$ $$75$$

Question 4

Which of the following factors will shift the labor supply curve to the right?

Accepted Answer

An increase in population.

Question 5

If a firm faces a market wage rate of $$w$$ and the value of marginal product of labor (VMPL) for the next worker is less than $$w$$, what should the firm do?

Accepted Answer

Not hire the additional worker.

Question 6

Which equation correctly expresses the value of marginal product of labor?

Accepted Answer

$$VMPL = MPL 	imes P$$

Question 7

A bakery expects Greg's marginal product to be 15 and Jamal's marginal product to be 15. The firm hires Greg after flipping a coin. Is this taste-based discrimination, statistical discrimination, or neither?

Accepted Answer

Neither

Question 8

Which of the following is an example of compensating wage differentials?

Accepted Answer

Higher wages paid to workers in dangerous jobs.

Question 9

Skill-biased technological change tends to:

Accepted Answer

Increase the productivity and wages of skilled workers relative to unskilled workers.

Question 10

If the marginal product of labor (MPL) is 10 and the wage is $100, what is the price of output according to the profit-maximizing condition?

Accepted Answer

$$P = \frac{100}{10} = 10$$

Question 11

Which of the following is NOT a main factor of production?

Accepted Answer

Entrepreneurship

Question 12

A firm expects Greg's marginal product to be 20 and Jamal's marginal product to be 10. The firm hires Greg. Is this taste-based discrimination, statistical discrimination, or neither?

Accepted Answer

Neither

Question 13

Which of the following would cause a leftward shift in the labor demand curve?

Accepted Answer

Introduction of labor-saving technology.

Question 14

If the market wage for bakers is $$25/hour, Greg's marginal product is 10, Jamal's marginal product is 20, and the bakery earns 2 $$per loaf, whom should the bakery hire?

Accepted Answer

Jamal only

Question 15

Which of the following is an example of statistical discrimination?

Accepted Answer

An insurance company offers lower rates to females with high GPAs based on observed accident data.

Question 16

Which formula represents the value of marginal product of capital (VMPK)?

Accepted Answer

$$VMPK = MPK 	imes P$$

Question 17

If Oprah Winfrey's love for bread increases the price per loaf to $$3, Greg's marginal product is 10, Jamal's is 20, and the market wage is 25/$$hour, whom should the bakery hire?

Accepted Answer

Both Greg and Jamal

Question 18

Which of the following is NOT a reason for wage inequality?

Accepted Answer

Differences in union membership

Question 19

In a perfectly competitive labor market, the equilibrium wage is determined by:

Accepted Answer

The intersection of the labor supply and labor demand curves.

Question 20

Which of the following will shift the labor supply curve to the left?

Accepted Answer

An increase in opportunity costs of working.

Markets for Factors of Production: Labor, Capital, and Land (Microeconomics Chapter 11 Study Notes)

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