1. Aside from your skills and how hard you work, what does your marginal product
ID: 1223633 • Letter: 1
Question
1. Aside from your skills and how hard you work, what does your marginal product of labor reflect?
A) your supply of labor (incorrect answer)
B) the productivity of everyone else in your economy
C) your chance of death on the job
D) nothing
2.. In a market economy discrimination by employers will NOT:
A) causes the wages of the discriminated group to fall because of decreased demand for their services. (incorrect answer)
B) reduces the firm's profits.
C) tends to disappear over time because of the profit motive.
D) increases the firm's profits.
3. Which of the following best explains why assembly-line workers in the United States earn significantly more than assembly-line workers in Mexico?
I. The supply of low-skilled laborers, such as those that work on assembly lines, is higher in Mexico.
II. The demand for assembly-line workers is higher in the United States.
III. Assembly-line workers are more productive in the United States.
A) I and II only (incorrect answer)
B) II and III only
C) I and III only
D) I, II, and III
4. If the marginal product of labor is constant in labor, then a market labor demand curve is:
A) positively sloped. (incorrect answer)
B) negatively sloped.
C) flat.
D) varied.
Explanation / Answer
1. Marginal product of labor is the additional product added by the one extra hired labor. When a firm is hiring labor, the hiring decision involves the comparison of the cost of hiring such labor and the benefit it is providing in the form of increased output. This implies MPL should be the productivity of worker.
But if I am asked what your marginal product of labor reflects, my answer would be my own productivity, and not the productivity of everyone else in your economy. As their own MPL would reflect their productivity
Hence the correct option is D.
2. Discrimination by employers in hiring and selecting the staff will increase the demand for one type of worker. This will increase their wage rate and hence profits will reduce.
Hence the correct option is B.
3. All the three explanations are correct. Mexico is a labor abundant country so high skilled workers are few and there is a surplus of low skilled workers. The supply of low-skilled laborers, such as those that work on assembly lines, is higher in Mexico. The demand for assembly-line workers is higher in the United States. Assembly-line workers are more productive in the United States
Hence the correct option is D.
4. The marginal product of labor curve (MPL) shows the additions to the total product as the additional units of labor is employed. It is often used as an alternative to the labor demand curve since both curves exhibits the downward relationship between real wages and quantity of labor supplied. If the marginal product of labor is constant in labor, then a market labor demand curve is will also be flat.
Hence the correct option is C.
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