We assume that when a firm hires additional workers, the marginal physical product of labor will
A. increase because large firms are more efficient.
B. decrease because each worker now has less capital and other resources to work with.
C. increase because more workers can always get more work done.
D. decrease because the new workers are likely to be less able than the previously hired ones.
Answer: B
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Increasing the income tax rate ________ the before-tax real wage rate and ________ the after-tax real wage rate
A) lowers; raises B) raises; raises C) does not change; raises D) raises; lowers E) lowers; lowers
Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = l, r = 500). He must pay unionized donut bakers a monthly salary of $400 each
He projects his monthly production function to be Q = 5KL where Q is tons of donuts. a. With the current level of capital, what is the marginal product of labor? Is the marginal product diminishing? Explain. b. If Evren wishes to make 25 tons of donuts, how many bakers are required given the current level of capital? How much will it cost to produce this (total cost)? c. Derive Evren's short-run cost function with K=1. d. Derive the marginal cost curve from your answer to c. and show the relationship between the marginal cost and marginal product of labor.
Which of the following is most limited in scope under a pure market economy? a. Freedom of choice
b. Consumer sovereignty. c. Entrepreneurship. d. Government.
Compared to high skilled workers, low skill workers are more
What will be an ideal response?