ScienceEconomicsChapter 14 and 15 Test
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Chapter 14 and 15 Test

Bianca Torres avatar Bianca Torres
23 February 2023
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The labor demand curve of a purely competitive seller:
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slopes downward because of diminishing marginal productivity
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Marginal resource cost is:
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the increase in total resource cost associated with the hire of one more unit of the resource.
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The demand for airline pilots results from the demand for air travel. This fact is an example of
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the derived demand for labor.
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Assume the price of capital falls relative to the price of labor and, as a result, the demand for labor increases. Therefore:
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the output effect is greater than the substitution effect.
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Assuming a competitive resource market, a firm is hiring resources in the profit-maximizing amounts when the:
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marginal revenue product of each resource is equal to its price.
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Marginal revenue product measures the:
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amount by which the extra production of one more worker increases a firm's total revenue.
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When economists say that the demand for labor is a derived demand, they mean that it is:
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related to the demand for the product or service labor is producing.
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A competitive employer should hire additional labor as long as:
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the MRP exceeds the wage rate.
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Other things equal, the resource demand curve of an imperfectly competitive seller will:
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be less elastic than that of a purely competitive seller.
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The marginal revenue product schedule is:
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the firm's resource demand schedule.
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Marginal revenue product (MRP) of labor refers to the:
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increase in total revenue resulting from the hire of one more unit of labor.
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If an exclusive union is successful in restricting the supply of labor, the:
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wage rate will rise.
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The market supply curve for labor is upsloping because:
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employers as a group must pay higher wage rates to obtain more workers.
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The concept of investment in human capital indicates that:
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expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment.
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Unions might support a higher minimum wage because:
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a higher minimum wage makes less-skilled workers less substitutable for union workers.
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A monopsonistic employer:
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confronts a marginal resource (labor) cost that is greater than the wage rate.
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If the nominal wage rises by 4 percent, and the price level rises by 7 percent, the real wage will:
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fall by 3 percent.
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Craft unions:
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only organize workers who have a particular skill.
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In a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which:
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marginal revenue product equals marginal resource (labor) cost.
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A firm operating in a purely competitive resource market faces a resource supply curve that is:
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perfectly elastic.