Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 19, Problem 3MCQ
To determine
To choose:
The option that correctly explains the labor curve for the supply of an individual.
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6. If leisure is an inferior good, what can you say about the slope of the
labor supply curve?
In the short run, the owner of a firm should continue to hire additional units of labor until:
a. the price of the product is equal to the wage rate divided by the marginal product of labor.
b. the wage rate is equal to the price of the product multiplied by the marginal product of labor.
c. the marginal product of labor is equal to the wage rate divided by the product price.
d. Both a and c are correct.
e. All of the above are correct.
Will decrea
n he fong run, assume a firm uses both labor and capital to produce 25 units of output. The marginal
product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being
employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of
output, what must be the unit price of capital?
Chapter 19 Solutions
Foundations of Economics (8th Edition)
Ch. 19 - Prob. 1SPPACh. 19 - Prob. 2SPPACh. 19 - Prob. 3SPPACh. 19 - Prob. 4SPPACh. 19 - Prob. 5SPPACh. 19 - Prob. 6SPPACh. 19 - Prob. 7SPPACh. 19 - Prob. 8SPPACh. 19 - Prob. 9SPPACh. 19 - Prob. 10SPPA
Ch. 19 - Prob. 1IAPACh. 19 - Prob. 2IAPACh. 19 - Prob. 3IAPACh. 19 - Prob. 4IAPACh. 19 - Prob. 5IAPACh. 19 - Prob. 6IAPACh. 19 - Prob. 7IAPACh. 19 - Prob. 8IAPACh. 19 - Prob. 9IAPACh. 19 - Prob. 1MCQCh. 19 - Prob. 2MCQCh. 19 - Prob. 3MCQCh. 19 - Prob. 4MCQCh. 19 - Prob. 5MCQCh. 19 - Prob. 6MCQCh. 19 - Prob. 7MCQ
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- Help!arrow_forward69. If the price of labor falls relative to the price of capital, and as a result the quantity of capital employed decreases, it can be concluded that: A. The substitution effect is greater than the output effectB. The output effect is greater than the substitution effectC. The income effect is greater than the output effectD. Labor cannot be easily substituted for capitalarrow_forwardYou are given a scenario where this a change in a factor of production or a change in demand for an item. You need to explain in sentence form how this would change the demand for labor. See the example and model your answers after how the example is written.arrow_forward
- If a person's wage decreases: A) his marginal value product curve will shift to the left B) his marginal calue product curve will shift to the right C) there will be a movement to the northwest along the marginal value product curve D) the slope of the marginal value product curve will increasearrow_forwardThe marginal rate of technical substitution of labor for capital (MRTSLK) is defined as the rate at which the quantity of ______.A. capital can be increased for every one unit increase in the quantity of laborB. capital can be increased if the quantity of labor remains the sameC. labor can be reduced as capital costs increaseD. capital can be reduced for every one unit increase in the quantity of laborarrow_forwardIf the price of capital decreases and the demand for labour decreases then Select one: OA. the scale effect is less than the substitution effect. OB. the scale effect and substitution effect offset each other. Oc. the scale effect is greater than the substitution effect. OD. capital and labour are gross complements.arrow_forward
- Illustrate and examine how the individual supply of labor curve demonstrates the way an individual divides his/her time between work and leisure.arrow_forwardIn the short‑run specific‑factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops. Round values to the nearest one-half unit. a. Demonstrate a change in the supply of land on the accompanying graph. b. New equilibrium wage is? c. New quantity of agricultural labor is?arrow_forwardHi- please answer both A and B A construction company has two types of employees: skilled and unskilled. A skilled employee can build 1 yard of a brick wall in one hour. An unskilled employee needs twice as much time to build the same wall. The hourly wage of a skilled employee is $15. The hourly wage of an unskilled employee is $8. a) Write down a production function with labor. The inputs are the number of hours of skilled workers, LS, the number of hours worked by unskilled employees, LU, and the output is the number of yards of brick wall, Q. b) What is the cost-minimizing way to build 100 yards of a wall?arrow_forward
- Pizza production requires labor (cooks) and capital (ovens). If the wage rate for cooks is $15 per hour and the rental rate on ovens is $20 an hour and the MPP for cooks is 4 pizzas and the MPP for ovens is 10 pizzas, and a pizza costs $20, what should the firm do? Hire more labor because the MRP per dollar spent on labor is higher than capital. Hire more capital because the MRP per dollar spent on capital is hire than for labor. Hire more of both because they generate more revenue than they cost. O Do nothing.arrow_forwardUse a diagram to thoroughly explain the backward bending labor supply curve and explain what income and substitution effects are.arrow_forwardWith the help of a diagram, make a distinction between substitution effect and income effect on individual labour supply.arrow_forward
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