Economics Ch 11 Quiz

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Marginal [revenue] product
The increase in a firm's total revenue resulting from hiring an [additional] unit of labor or other variable resource.

Demand curve for labor
A curve showing the different quantities of labor employers are willing to [hire] at [different] wage rates in a given time period, ceteris paribus. It is equal to the marginal revenue product of labor.

Derived demand
The demand for labor and other factors of production that depends on the [consumer] demand for the final goods and services the factors produce.

Supply curve of labor
A curve showing the different quantities of labor [workers] are willing to offer employers at different wage rates in a given time period, ceteris paribus.

Human capital
The [accumulation] of [education], training, [experience], and health that enables a worker to enter an occupation and be productive.

Collective bargaining
The process of [negotiating] labor contracts between the union and management concerning wages and working conditions.

This chapter begins with a discussion of how the forces of supply and demand in a competitive labor market determines the wage rate. The firm's demand curve for labor is the firm's marginal revenue product, MRP, curve. The supply curve of labor is the relationship between the wage rate of labor and the quantity of labor supplied in the market. As a product's price is determined, the equilibrium wage rate is established by the intersection of the labor market supply and demand curves. Labor unions can increase the wage rate by increasing the demand for labor, decreasing the supply of labor, or collective bargaining.

If more and better technology is used for producing wheat in the United States than in a lesser-developed country, then the:

Selected Answer: MRP of the U.S. workers will be lower than the MRP of the workers in the lesser-developed country. Correct Answer: MRP of the U.S. workers will be higher than the MRP of the workers in the lesser-developed country.

Question 2 4 out of 4 points
Alan Jones owns a company that sells life insurance. When he employs 10 salespersons his firm sells $200,000 worth of contracts per week, and when he employs 11 salespersons, total revenue is $210,000. The marginal revenue product of the 11th salesperson is:

Selected Answer: $10,000.
Correct Answer: $10,000.

Question 3 0 out of 4 points
If the MRP of labor decreases, labor:

Selected Answer: demand will increase.
Correct Answer: demand will decrease.

Question 4 4 out of 4 points
A firm's demand curve for labor coincides with the:

Selected Answer: marginal revenue product curve.
Correct Answer: marginal revenue product curve.

Question 5 0 out of 4 points
Exhibit 11-6 Demand for labor curves

In Exhibit 11-6, which of the following could have caused the shift in labor demand from D1 to D2?

Selected Answer: Increase in wages.
Correct Answer: Increase in the demand for the product.

Question 6 0 out of 4 points
A union can influence the demand for labor by:

Selected Answer: all of the above.
Correct Answer: effective advertising that convinces customers to buy the "union label."

Question 7 4 out of 4 points
A firm's demand for labor depends on, in part, the demand for the firm's product. To summarize this idea, economists say that the demand for labor is:

Selected Answer: derived demand.
Correct Answer: derived demand.

Question 8 4 out of 4 points
Featherbedding allows unions to increase wages by:

Selected Answer: increasing firms' demand for labor.
Correct Answer: increasing firms' demand for labor.

Question 9 4 out of 4 points
If the price of labor falls, we can expect:

Selected Answer: quantity demanded of labor will increase....
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