Chapter 10: input demand: the labor and land. Derived demand: the demand for resources (inputs) that is dependent on the demand for the outputs those resources can be used to produce. Inputs are demanded by a rm if and only if households demand the good or service provided by that rm. Productivity of an input: the amount of output produced per unit of that input. Marginal product of labor (mpl: the additional output produced by 1 additional unit of labor. Marginal revenue product (mrp) or value of marginal product (vmp: the additional revenue a rm earns by employing 1 additional unit of input, ceteris paribus. Marginal revenue product per hour of labor in sandwich production (one. Labor (mpl) (sandwiches per hour) (4) price (px) (value added per. 0. 00 a the price is essentially pro t per sandwich; sea discussion in text. Deriving a marginal revenue product curve from marginal product.

Question 1

A firm should hire workers up to the point where

Question 1 options:

	MP = P.
	MFC = P.
	MFC = MRP.
	MP = MRP.

Question 2

If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know that

Question 2 options:

	MFC/MPP_L = wage.
	MFC/MRP_L = 1.
	MFC = MPP_L.
	MRP_L/P = MFC.

Question 3

A firm that maximizes profits also

Question 3 options:

	pays input prices lower than other firms do.
	cuts corners in production processes so that its products are made too cheaply.
	is inefficient.
	uses the least-cost combination of resources.

Question 4

The demand curve for labor slopes down because

Question 4 options:

	firms value less efficient workers less than they value more efficient workers.
	firms must lower prices to sell the additional units of its product that the extra workers produce.
	of profit maximizing behavior.
	of the law of diminishing marginal product.

Question 5

If MFC > MRP_L, the firm should

Question 5 options:

	get rid of some capital.
	reduce the number of workers.
	lower wages.
	hire more workers.

Question 6

Which of the following will not lead to an increase in the demand for labor for a firm producing automobiles?

Question 6 options:

	A decrease in labor productivity.
	A decrease in the price of automobiles.
	A decrease in the price of robots that are used to solder parts of the car together.
	An increase in the demand for automobiles.

Question 7

The marginal revenue product gives

Question 7 options:

	the additions to total cost when an additional unit of a variable input is hired.
	the additional revenue obtained when an additional unit of a variable input is hired.
	the change in total product for an additional unit of a variable input.
	the amount that other inputs must increase by when labor increase by one unit.

Question 8

The monopolist's input demand curve is the

Question 8 options:

	marginal physical product curve.
	marginal revenue product curve.
	marginal revenue curve.
	marginal factor cost.

Question 9

An increase in product price implies that

Question 9 options:

	the firm's demand for labor increases.
	the firm's demand for labor decreases.
	the wage rate the firm pays will increase.
	the firm's marginal factor cost will increase.

Question 10

Which of the following will not lead to a change in the demand for labor?

Question 10 options:

	A change in the supply of labor.
	A change in demand for the final good.
	A change in the price of a substitute input.
	A change in labor productivity.

skyox48

Suppose a firm in a competitive industry faces an equilibrium product price of $2 per unit of output. Table A provides information on the output produced by various amounts of labor. Use this information to complete the remaining columns of Table A, and to fill in the labor demand schedule in Table B.

Table A: Production Schedule Units of Labor Total Product

Units of Labor	Total Product	AP	MP	MRP
0	0
1	13
2	25
3	34
4	42
5	46
6	48

(a) Complete Table A, where AP is the average product of labor, MP is the marginal product of labor, MRP is the marginal revenue product of labor.

(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market

Wage Rate	Quantity Demanded
24
16
8

(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?

byzantiumhyena683

Table A: Production Schedule Units of Labor Total Product [AP, MP, and MRP need completing]

0 0

1 13

2 25

3 34

4 42

5 46

6 48

Table B: Labor Demand Schedule Wage Rate Quantity Demanded

24 16 8

(a) Complete table A, where AP is the average product of labor, MP is the marginal product of labor, and MRP is the marginal revenue product of labor.

(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market.

(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by this firm?

tealhamster507

ECON 102 Lecture Notes - Lecture 6: Marginal Revenue Productivity Theory Of Wages, Ceteris Paribus, Marginal Revenue

ECON 102 Full Course Notes

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