Q4、Are the following two statements about the elasticity of labor demand CORRECT?

Statement 1: Labor demand is more elastic in the short run than in the long run because other factors of production are fixed in the short run.

Statement 2: The more labor-intensive a firm’s production processes, the more elastic the firm’s demand for labor will be.

          Statement 1                                   Statement 2

A)   Incorrect                                Incorrect

B)   Incorrect                                Correct

C)   Correct                                  Correct

Q5、Which of the following changes would most likely decrease a firm’s demand for labor?

A)   Decrease in the price of the firm’s product.

B)   Technological improvement in the firm’s production process.

C)   Decrease in the price of a productive input that is a complement to labor.

Q6、The quantity of labor that a profit maximizing firm will employ, holding other input factors constant, is the level at which:

A)   one more unit of labor would cost less than the value of its additional output.

B)   the marginal product of labor is equal to the marginal cost of labor.

C)   the marginal revenue product of labor is equal to the wage rate.

Q7、The steeper a firm’s marginal revenue product curve for a given resource, the:

A)   more elastic the firm's demand curve for the resource.

B)   lower the mobility of the resource.

C)   less elastic the firm's demand curve for the resource.

答案和详解如下：

Q4、Are the following two statements about the elasticity of labor demand CORRECT?

Statement 1: Labor demand is more elastic in the short run than in the long run because other factors of production are fixed in the short run.

Statement 2: The more labor-intensive a firm’s production processes, the more elastic the firm’s demand for labor will be.

          Statement 1                                   Statement 2

A)   Incorrect                                Incorrect

B)   Incorrect                                Correct

C)   Correct                                  Correct

Correct answer is B)

Statement 1 is incorrect. The fact that other factors of production are fixed makes labor demand less elastic in the short run. Statement 2 is correct. A firm will have more elastic labor demand when labor represents a larger proportion of its input costs.

Q5、Which of the following changes would most likely decrease a firm’s demand for labor?

A)   Decrease in the price of the firm’s product.

B)   Technological improvement in the firm’s production process.

C)   Decrease in the price of a productive input that is a complement to labor.

Correct answer is A)

If the price of the firm’s product decreases, its marginal revenue, and therefore the marginal revenue product of its inputs, will also decrease. This will decrease the firm’s demand for labor. Both remaining choices describe events that would be likely to increase the firm’s demand for labor.

Q6、The quantity of labor that a profit maximizing firm will employ, holding other input factors constant, is the level at which:

A)   one more unit of labor would cost less than the value of its additional output.

B)   the marginal product of labor is equal to the marginal cost of labor.

C)   the marginal revenue product of labor is equal to the wage rate.

Correct answer is C)

For any productive input, including labor, a profit maximizing firm will employ additional units of the input until its marginal revenue product is equal to its price (the wage rate is the price of labor). If one more unit of labor would cost less than the value of its additional output, the firm will increase profits by adding that unit. Marginal product is measured in units of output and cannot be compared directly to marginal cost, which is measured in units of money.

Q7、The steeper a firm’s marginal revenue product curve for a given resource, the:

A)   more elastic the firm's demand curve for the resource.

B)   lower the mobility of the resource.

C)   less elastic the firm's demand curve for the resource.

Correct answer is C)

The marginal revenue product curve of a resource for a given firm will directly determine the firm's demand curve for the resource. If the marginal revenue curve for a resource is steep, then the demand curve for the resource will be steep. Resource mobility is not determined by its MRP.

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