a labor market is imperfect due to market power by a firm, the result in that fe

Question

a labor market is imperfect due to market power by a firm, the result in that fewer workers hired at a wage below their marginal value. more workers market typically is: A) 3)fewer workers hired at a wage above their marginal value. hired than in a competitive market, at a wage below their marginal competitive market, at a wage above their marginal value. more workers hired than in a D) value. Which measurement rises most quickly as more labor is hired? A) the value of the marginal product of labor B) the marginal revenue product of labor C) the supply of labor D) the marginal factor cost of labor 20. 21. Which of these would NOT be categorized as A) a cornfield that is owned by a farming co-op "land" as a factor of production? B) C) D) a coal mine in West Virginia an axe used to cut down trees in a forest a stream that contains an abundance of trout 22. If an asset pays $300 per year forever, what is this asset worth in terms of present value if the interest rate is 6%? A) $500 B) $1,800 C) S3,000 D) $5,000 23. The main advantage of issuing stock to raise financial capital is: A) B) C) D) limited liability of risk ability to retain complete ownership not having to share profits with investors the ability to keep company information and data private 24. When a bond's rating goes from AAA to C, this means that the price of the bonds already issued will likelywhich will A) rise; increase B) rise; decrease C) fall; increase D) fall; decrease its yield.

Explanation / Answer

Q19 . -( C) When labour is imperfect due to market power of a firm, this generally results in lesser bargaining power on the side of the labourers.As a result firms are able to instill thier dominance and hire a larger number of labourers at lesser wage rates which is below thier marginal value. One example is the case of monopsony where there is oonly 1 buyer to the factor.

Q20. (C ) As more labour is hired, the cost of hiring one additional labour starts to increase in a competitive market as the demand for labour increases. This happens because as demand increases, labour becomes scarece and the value of additional units of labour starts increasing.

Q21. (C) An axe used to cut down trees cannot be regarded as land. This is because land includes only natural resources and axe is not one.

Q22.

Q23.(A) By issuing stocks, the individual can raise a limited liability of risk i.e. in any event of insolvency the individual's personal assets are safe and creeditors can only be compensated upto the amount of stock raised by the firm .

Q24. (c) When the credit rating falls from AAA to C, lesser investors are going to invest in such a bonds due to low credibility. Thus in order to make such bonds more attractive, the seller will have to reduce the prices. Moreover there is an inverse relation between bond prices and yield. Thus when the prices fall, the bond yield increases.

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