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Figure 14.4 -Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers,and both groups of workers earn the perfectly competitive wage.What happens to the equilibrium employment level and wage for union workers? A) Both increase. B) Employment increases and wage declines. C) Wage increases and employment declines. D) Both decline. Figure 14.4 -Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers,and both groups of workers earn the perfectly competitive wage.What happens to the equilibrium employment level and wage for union workers?


A) Both increase.
B) Employment increases and wage declines.
C) Wage increases and employment declines.
D) Both decline.

E) A) and D)
F) B) and C)

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Other things being equal,the marginal revenue product (MRP) curve for a competitive seller


A) lies below the MRP curve for a monopolist.
B) is identical to the MRP curve for a monopolist.
C) lies above the MRP curve for a monopolist.
D) is upward sloping whereas a monopolist has a downward sloping MRP curve.

E) A) and D)
F) A) and B)

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The Acme Company is a perfect competitor in its input markets and its output market.Its average product of labor is 30,the marginal product of labor is 20,the price of labor is $20,and the price of the output is $5.For Acme Company,the marginal revenue product of labor


A) is $100.
B) is $150.
C) is $400.
D) is $600.
E) cannot be determined with the information provided.

F) A) and B)
G) A) and C)

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In the situation involving a bilateral monopoly,a


A) single firm acts as both the monopsonist and the monopoly.
B) single seller sells to a single buyer.
C) monopsonist sells to a monopsonist.
D) monopolist sells to a monopolist.

E) A) and B)
F) C) and D)

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Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a


A) competitive buyer.
B) competitive seller.
C) monopoly buyer.
D) monopoly seller.

E) B) and D)
F) All of the above

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An increase in technology in fabric design changes Trisha's marginal product of labor function from MPL(L)= 0.5 - 0.01L to MP'L (L)= 0.625 - 0.01L.If Trisha can sell all the output she desires at $120 and she must pay each unit of labor she employs $24,what effect does the change in technology have on labor employment?

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Trisha's original marginal revenue of th...

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Why doesn't the marginal worker hired earn economic rent in a competitive labor market?


A) His reservation wage is less than the wage.
B) His reservation wage is greater than the wage.
C) His reservation wage is equal to the wage.
D) He is paid a wage that is lower than the others.

E) A) and B)
F) A) and C)

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Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize the number of workers hired,the labor union will agree to wage rate: A) W<sub>0</sub>. B) W<sub>1</sub>. C) W<sub>2</sub>. D) W<sub>3</sub>. E) none of the above Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize the number of workers hired,the labor union will agree to wage rate:


A) W0.
B) W1.
C) W2.
D) W3.
E) none of the above

F) A) and B)
G) D) and E)

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Figure 14.4 -Given the information in Figure 14.4,the monopsony wage rate is: A) W<sub>1</sub>. B) W<sub>2</sub>. C) W<sub>3</sub>. D) W<sub>4</sub>. E) none of the above Figure 14.4 -Given the information in Figure 14.4,the monopsony wage rate is:


A) W1.
B) W2.
C) W3.
D) W4.
E) none of the above

F) None of the above
G) A) and E)

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What happens to the marginal revenue product curve of a factor as more of a complementary factor is hired?


A) It shifts to the left,because its marginal product decreases.
B) It shifts to the left,because its marginal product increases.
C) It shifts to the right,because its marginal product decreases.
D) It shifts to the right,because its marginal product increases.

E) B) and C)
F) A) and C)

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Figure 14.1 A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A.After a wage increase,the consumer's utility maximizing combination changes to point C. -Refer to Figure 14.1.The income effect of the wage increase on the amount of hours of leisure is: A) L<sub>0</sub> to L<sub>2</sub>. B) L<sub>0</sub> to L<sub>1</sub>. C) L<sub>1</sub> to L<sub>2</sub>. D) L<sub>2</sub> to L<sub>1</sub>. E) none of the above Figure 14.1 A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A.After a wage increase,the consumer's utility maximizing combination changes to point C. -Refer to Figure 14.1.The income effect of the wage increase on the amount of hours of leisure is:


A) L0 to L2.
B) L0 to L1.
C) L1 to L2.
D) L2 to L1.
E) none of the above

F) B) and E)
G) B) and C)

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The marginal expenditure curve for labor is based on the assumption that


A) the most productive workers are hired first.
B) the wage rate is independent of the quantity of labor employed.
C) the market supply curve for labor is infinitely elastic.
D) all workers are paid the same wage rate.
E) none of the above

F) D) and E)
G) None of the above

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Suppose the labor market and all output markets are perfectly competitive.When the labor market is in equilibrium,the wage rate will:


A) be less than the marginal revenue product of labor.
B) equal the marginal revenue product of labor.
C) be greater than the marginal revenue product of labor.
D) None of the above is necessarily correct.

E) A) and B)
F) All of the above

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Which of the following statements is TRUE when comparing monopsony and competitive labor markets?


A) The monopsony hires more workers but pays a lower wage.
B) The monopsony hires more workers at a higher wage.
C) The monopsonist's wage is lower and quantity of labor higher than would prevail under competition.
D) The monopsonist's wage and quantity of labor are lower than would prevail under perfect competition.

E) A) and B)
F) B) and D)

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Let P be the output price for a particular good.Why is the value P*MPL greater than MRPL for a monopolist?


A) The monopolist is not as technically efficient as firms operating under perfect competition.
B) The monopolist hires less labor,so MPL is higher under a monopoly than under perfect competition.
C) The monopolist sets a price that is higher than MR.
D) A and C are correct.
E) B and C are correct.

F) C) and E)
G) C) and D)

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Figure 14.4 -Given the information in Figure 14.4,the bilateral monopoly wage rate is: A) W<sub>1</sub>. B) W<sub>2</sub>. C) W<sub>3</sub>. D) W<sub>4</sub>. E) Any of the above. Figure 14.4 -Given the information in Figure 14.4,the bilateral monopoly wage rate is:


A) W1.
B) W2.
C) W3.
D) W4.
E) Any of the above.

F) None of the above
G) D) and E)

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In a competitive labor market,with one variable factor,the supply of labor to the firm is


A) equal to the marginal expenditure curve.
B) equal to the demand curve for labor.
C) greater than the marginal expenditure curve.
D) equal to the marginal revenue product curve.

E) B) and C)
F) A) and B)

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Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize total wages paid to workers,the labor union will agree to wage rate: A) W<sub>0</sub>. B) W<sub>1</sub>. C) W<sub>2</sub>. D) W<sub>3</sub>. E) none of the above Figure 14.3 A labor union is exercising monopoly power in the labor market. -Refer to Figure 14.3.To maximize total wages paid to workers,the labor union will agree to wage rate:


A) W0.
B) W1.
C) W2.
D) W3.
E) none of the above

F) A) and D)
G) C) and D)

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