Markets for Factors of Production LOSB习题精选 increase, following, determine, net, 2010

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LOS b: Describe the factors that cause changes in the demand for labor and the factors that determine the elasticity of the demand for labor.

labor market analyst makes the following assertions about trends in labor income:

Statement 1: The net effect of technological improvements has been to increase the demand for labor. This can be seen in the long-run increase in real wage rates.

Statement 2: The broadest measure of labor income is total wages, salaries, and tips received.

With respect to these statements:

A) both are incorrect.

B) only statement 2 is incorrect.

C) only statement 1 is incorrect.

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Statement 1 is correct. Technological improvements increase demand for some types of labor and decrease demand for other types, but the net long-run effect has been to increase demand for labor as a whole. The long-run increase in real wage rates is evidence that supports this assertion. Statement 2 is incorrect. A more complete measure of labor income is total labor compensation, which includes employer-provided benefits as well as wage and salary income.

 

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A firm's demand for labor and a firm's demand for physical capital is respectively more elastic in the:

A) short run; short run;

B) short run; long run.

C) long run; long run.

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The short run is defined at the period during which the quantities of other inputs are fixed. In the long run a firm’s demand for capital is more elastic because technology, the amount of labor, and the quantities of other inputs can be varied. A firm’s demand for labor is more elastic in the long run than in the short run. For a given increase in wage rates, a firm’s quantity of labor demand will decrease more when it can substitute other factors of production (the long run) than when other factors are fixed (the short run).

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An industrial economist is evaluating the supply and demand conditions for two different factors of production.

Factor 1: The demand curve is derived from the resource’s marginal revenue product in the current period.

Factor 2: The supply curve is perfectly inelastic and the price is determined by demand.

Which of the following choices most likely identifies these two factors of production?

Factor 1

Factor 2

A) Labor Non-renewable resource

B) Machinery Renewable resource

C) Labor Renewable resource

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Labor produces its marginal output in the current period, when the labor is actually performed, so the demand curve is derived from the MRP of labor in the current period. With machinery, the output is generated over a number of periods, so the relevant MRP is the machine’s future MRP. The supply of a renewable resource is perfectly inelastic and demand determines the equilibrium price. With a non-renewable resource, supply is perfectly elastic and demand determines the equilibrium quantity supplied.

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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) Correct Correct

C) Incorrect Correct

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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.

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

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

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

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

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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.

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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 revenue product of labor is equal to the wage rate.

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

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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.

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

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

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

C) lower the mobility of the resource.

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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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All of the following are factors that can cause shifts in the demand curve for a resource EXCEPT:

A) an increase in the supply of the resource.

B) an increase in the resource’s productivity.

C) a decrease in the prices of other resources.

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There is no reason to believe that an increased supply will cause a shift in the demand curve. There is no indication to whether a supplier will reduce the price to reflect the change in supply.