Download If two inputs (capital and labor) are gross

When
economists refer
to labor demand
as a derived
demand, they
mean:
Its demand is derived from supply.
Its demand is found by taking the first derivative of the total
revenue function.
Its demand is derived from the demand for the good or service
workers contribute to producing.
Its demand is derived from the historical precedent of
compensation for comparable jobs.
Firms’; primary objective is:
Utility maximization.
Output maximization.
Profit maximization.
Respect maximization.
The profit-maximizing output will always occur where:
Total revenue equal total costs.
Marginal revenue equals marginal costs.
Average revenue equals average costs.
A firm’s customer goodwill is maximized.
The Marginal Product of Labor (MPL) represents the:
Additional output generated by increasing capital by one unit.
Additional sales generated by increasing labor by one unit.
Additional output generated by increasing both labor and capital such that
the factor proportions used in the production process are unaltered.
Additional output generated by increasing labor by one unit.
A critical assumption economists make about the relationship
between the quantity of labor hired and the marginal product of
labor is that:
The MPL diminishes to an irreducible minimum, then increases (i.e., the MPL
curve is u-shaped).
The two variables are totally unrelated.
The MPL increases as additional units of labor are added to the production
process.
The MPL diminishes as additional units of labor are added to the production
process.
If two inputs (capital and labor) are gross substitutes in the
production process, an increase in the price of labor will have what
impact on the market for capital?
The capital market will only be affected if entrepreneurial ability is not an
input in the production process.
The price of capital will necessarily fall as well.
The demand curve for labor will shift inward.
The demand curve for capital will shift outward.
Consider a hypothetical firm operating in competitive product and
labor markets. Suppose that at present the product price is P = $10,
the marginal product of labor is MPL = 15 units of output per day,
and the daily wage rate is W = $90 per day. The firm should
adjust P, or W, or both in order to equate marginal revenue product to the
marginal expense of labor.
not alter the employment level, as the firm is already earning a profit of $60
for each worker employed.
reduce employment because that will increase profit.
increase employment because that will increase profit.
In the long run an increase in the wage, W, causes
both a scale effect and a substitution effect, but the overall impact on
employment is ambiguous because either one of these effects might
dominate depending on the firm in question.
a scale effect and a substitution effect, which both cause the firm to reduce
its desired employment level.
a substitution effect, leading the firm to reduce its desired employment
level, and an income effect, leading the firm to increase its desired
employment level.
only a substitution effect, leading the firm to reduce its desired employment
level.
If two inputs are substitutes in production, then an increase in the
price of the other input will shift the demand curve for a given
category of labor to
the left under any conceivable circumstance.
the right if the substitution effect is larger than the scale effect in absolute
value.
the right if the substitution effect is smaller than the scale effect in absolute
value.
the left if the substitution effect is larger than the scale effect in absolute
value.
In which case is the total amount of a payroll tax paid by employees
through lower wages?
When the labor supply curve is vertical.
When the labor supply curve is horizontal.
When the labor supply curve is downward-sloping and intersects the labor
demand curve along the x-axis.
When the labor supply curve is upward-sloping at a 45-degree angle.