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MicroEcon Final

STUDY
PLAY
Refer to picture 1. The firm:
is a wage taker
Refer to picture 1. The firm:
Has a constant marginal resource cost of $5.
A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is:
$15
A monopsonistic employer's marginal resource (labor) cost curve:
lies above the labor supply curve because the higher wage paid to an additional worker must also be paid t all other employed workers
Refer to picture 15. If this labor market is monopsonistic, the wage rate and level of employment respectively will be:
A and F
Refer to picture 26, in which the values for columns (2) through (5) are in acres. if the relevant columns are (1), (2), and (3), land rent will be:
$200 per acre
Economic rent refers to the price paid for land and other natural resources that:
are fixed in total supply
The supply curve of loanable funds is upsloping because:
households are willing to save more at high interest rates than they are at low interest rates
The demand for loanable funds is downsloping because:
households are willing to save more at high interest rates than they are at low interest rates
Other things equal, an increase in the equilibrium interest rate will:
decrease purchases of capital goods and reduce R&D spending.
The XYZ Corporatin can make a real (inflation-adjusted) return on an investment of 9 percent. The nominal rate of interest is 13 percent and the rate of inflation is 7 percent. We can conclude that the:
investment will be profitable.
A normal profit is:
the price required to retain entrepreneurial talent in some particular line of production
The largest single share of all income earned by americans consists of:
wages and salaries
Which of the following statements best illustrates the concept of derived demand?
A decline in the demand for shoes will cause the demand for leather to decline
The MRP curve for labor:
is the firm's labor demand curve
Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour the shop can provide 24 haircuts per 8 hour day. By hiring a second barber at the same wage rate the shop can now provide a total of 42 hair cuts per day.

The MP of the second barber is:
18 haircuts
Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour the shop can provide 24 haircuts per 8 hour day. By hiring a second barber at the same wage rate the shop can now provide a total of 42 hair cuts per day.

The MRP of the second barber is:
$108
Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour the shop can provide 24 haircuts per 8 hour day. By hiring a second barber at the same wage rate the shop can now provide a total of 42 hair cuts per day.

Harry should
hire the second barber because he will add $28 to profits
Refer to picture 45. This firm is:
selling its product in a purely competitive market
Refer to picture 45. If the firm is hiring wokers under purely competitive conditions at a wage rate of $22, it will employ
3 workers
Refer to picture 45. If the firm is hiring workers under a purely competitive condition at a wage rate of $10, it will emply:
5 workers
If the nominal wages of carpenters rose by 5 percent in 2010 and the price level increased by 3 percent, then the real wages of carpenters
increased by 2 percent
A profit-maximizing firm will:
expand employment if marginal revenue product exceeds marginal resource cost.
Refer to picture 67. This firm's product price is:
$4.
Refer to picture 83. How many workers will this profit-maximizing firm choose to employ?
3
Refer to picture 83. How many units of output will this profit-maximizing firm produce?
39
Refer to picture 83. What will be the profit maximizing wage rate?
$3
The economic term for a firm that is the sole buyer in a market is:
monopsonist
Refer to picture 107. GW company produces and sells hats in a perfectly competitive market at a price of $2 per hat. Assume that the labor is the only variable input and the wage rate is $15 per unit of labor per day. The table below shows GW's short-run production function for hats.

After which woker do diminishing marginal returns begin?
2
Refer to picture 107. GW company produces and sells hats in a perfectly competitive market at a price of $2 per hat. Assume that the labor is the only variable input and the wage rate is $15 per unit of labor per day. The table below shows GW's short-run production function for hats.

Calculate the marginal physical product of the fifth worker
5
Calculate the marginal revenue product of the third worker
$20
How many workers will GW hire to maximize profit?
4
If GW Company has fixed costs equal to $20, what will be the company's short-run economic profits from hiring two workers?
$2
If the price of hats increases what will happen to the number of workers hired in the short run?
# of workers hired will increase in order to increase output so that MRC=MRP
Where do employers want to employ at?
MRP=MRC ( also labor market equilibrium)
If MRC is higher than wage rate
firm is wage maker
How do monopsonys maximize profit
by hiring smaller amounts of workers
Money is more valuable...
the sooner it is obtained. (ability to gain interest etc)