ECON 3620 Lecture Notes - Lecture 4: Perfect Competition, Trpn, Production Function

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greymosquito32

18 Sep 2015

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Lecture 4: demand for labour in competitive labour market. Monopolistic competition: some firms to differentiate within the perfect competition, small influence labour. One full industry that buys all the supply. Monopsonistic competition: can influence the product, quality of agricultural product, influence the wages, railway tracks. Mr = mc: however, they"re going to produce where the average total cost = average total revenue, perfect competition. Mc = mr( = p = ar) Firms use two factors of production: labour (n, capital (k, output (q, q=f(k,n) K is fixed in the short run. A firm"s short run demand for labou in a perfectly competitive market. Mrpn = arpn firms maximize: cost they"re incurring is lower than the revenue that they"re earning. Looks like indifference curves, but costs curves. R= capital cost (rent on capital or wage) The impact of wage increase on labour demand. The effect of cost (wage) increase on output under perfect competition.

Related Questions

Suppose a firm purchases labour in a competitive domestic labour market and sells its product in a competitive international product market that covers the whole world. Domestic producers represent a small portion of the world market and do not influence the product price. The firm's elasticity of demand for labour is 0.5. Suppose the wage increases by 6 per cent. What will happen to the number of workers hired by the firm? What will happen to the marginal productivity of the last worker hired by the firm? Explain.

bronzeworm718

17. All of the following can raise union member wages except:

a. limiting union membership over time

b. increasing the demand for non-union made goods

c. increasing the productivity of union workers

d. increasing the demand for union-made goods

12. If a firm wants to maximize its profits, it should

a. equates the marginal revenue product for each input to the price of the input

b.hire unskilled labour rather than skilled labour since unskilled labour is cheaper

c. hire lots of capital and very little labour since labour needs to be trained

d. equate the marginal physical product for each input to the price of the input

10. A profit-maximizing monopolist will hire labour up to the point where

a. marginal revenue equals than the wage rate.

b. marginal revenue product is greater than the wage rate.

c. marginal revenue equals the price of the product.

d. marginal revenue product is less than the wage rate.

9. The practice of outsourcing has been given a boost by:

a. firms that are becoming more risk-averse.

b. advances in telecommunications and computer networking.

c. support from organized labour.

d.sharp increases in the cost of overseas labour.

8. Suppose firms in an industry hire unskilled labour and skilled labour. unskilled labour is a substitute for capital and skilled labour is a complement with capital. A decrease in the real price of capital would:

a. cause the demand for unskilled labour to increase and the demand for skilled labour to decrease. the wage of unskilled labour would rise relative to the wage of skilled labour

b. cause the demand for both kinds of labour to decrease. wages rates of both kinds of labour would decrease too.

c. cause the demand for labour to increase, raising wages of both skilled and unskilled labour.

d. cause the demand for unskilled labour to decrease and the demand for skilled labour to increase. the wage of unskilled labour would decrease relative to the wage of skilled labour.

emeraldsardine618

1. In a perfectly competitive industry, an individual firm faces:

a. a perfectly elastic labour supply curve

b. a perfectly inelastic labour supply curve

c.a perfectly vertical labour supply curve

d.none of the above

2. A firm purchases more capital equipment. We would expect to observe:

a. an increase in the supply of labour for this firm

b. a decrease in the supply curve of labour for this firm

c.an increase in the wage rate paid for labour by this firm

d.an increase in the demand for labour by this firm

3. Which of the following would be h most likely outcome if all perfectly competitive firms in a product market join together to form a monopoly?

a. the rate of output in the market will increase but the quantity of labour input will decrease

b.both the rate of output and the quantity of labour input employed will increase

c.the rate of output in the market will decrease but the quantity of labour input will increase

d.both the rate of output and the quantity of labour input employed will decrease

4. what does the marginal revenue product equal when 28 workers are hired in one week?

Labor input (workers per week)__Marginal physical product (output per week)__marginal revenue

25_______________________150_________________________________9.00

26_______________________140_________________________________8.50

27_______________________130_________________________________8.00

28_______________________120_________________________________7.50

29_______________________110________________________________7.00

a. $210

b.$7.50

c.$900

d.$1040

5. The profit-maximizing firm will hire additional workers until:

a. the extra revenue by the last workers hired equals zero

b.the extra cost associated with hiring the last worker equals the price of goods produced

c.the additional cost associated with hiring the last worker equals the average wage rate of workers

d.the additional cost associated with hiring the last worker equals the additional revenue generated by that worker.

rosehyena631

ECON 3620 Lecture Notes - Lecture 4: Perfect Competition, Trpn, Production Function

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