In competitive labor markets, firms hire: a. additional workers as long as the m

Question

In competitive labor markets, firms hire: a. additional workers as long as the marginal product of labor is positive b. the amount of labor needed to produce the profit-maximizing level of output. c. the amount of labor needed to produce the revenue-maximizing level of output. d. the number of workers they can afford given a fixed budget. 6. 7. In a competitive labor market, an increase in the equilibrium wage rate could result from a. a decrease in the demand for labor. b. an increase in the supply of labor. c. an increase in the demand for labor. d. a decrease in the number of workers represented by labor unions. 8. Ceteris paribus, the demand for farm workers will increase in response to all of the following except an increase in the: a. wage paid to farm workers. b. price of the agricultural output c. productivity of farm workers. d. demand for agricultural output. 9. For a competitive firm hiring in a competitive labor market,the profit maximizing rmile is to hire labor to the point where a. the marginal cost of the last unit of labor hired is zero. b. the value of the marginal product is equal to the wage rate. c. marginal product is equal to marginal cost. d. the value of the marginal product is at a maximum. 10. An increase in the marginal product of autoworkers would be expected to cause a(n) in the value of labor's marginal product and a(n) _ in the firm's demand for autoworkers. a. increase; increase b. decrease; decrease c. increase; decrease d. decrease; increase Chapter 15 Assignments 316

Explanation / Answer

16. In a competitive labour market,firms hire the amount of labour needed to produce the profit-maximising level of output. Therefore, option(b) is correct.

17. In a competitve labour market, an increase in the equilibrium wage could result from an increase in the demand for labour.Because when demand for labour increases then labour demand curve will shift to right and now, at equilibrium there will high employment and also high equilibrium wages. Therefore, option(c) is correct.

18. Ceteris paribus, the demand for farm workers will increase in response to all of the folllowing except an increase in the wage paid to farm workers .Because demand for farm workers and wages have inverse relationship.Therefoe, option(a) is correct.

19. For a competitive firm hiring in a competitive labor market ,the profit maximising rule is to hire labor to the point where the value of the marginal product is equal to the wage rate. Therefore,, option(b) is correct.

20. An increase in the marginal product of autoworkers would be expected to cause an increase in the value of labour's marginal product and an increase in the firm's demand for autoworkers.Because when MPL increases then P(MPL) also increases and when MPL is increasing then, firm will demand for more workers. Therefore, option(a) is correct.

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