Markets for Factors of Production - LOS b ～ Q4 white, style, black, class

mayanfang1

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.

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