What is the marginal revenue product of labor (MRP)? What shape does the MRP curve have? Why?
What will be an ideal response?
Marginal revenue product of labor is the marginal physical product of labor times marginal revenue of selling the good produced. It gives the additional revenue from hiring one more unit of labor. The curve slopes down because of the law of diminishing marginal product.
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If an economy is operating inefficiently, then
A. the economy can increase production of consumption goods without reducing capital goods. B. there is always a positive opportunity cost to increasing output. C. output can only be increased through capital investment. D. output cannot be increased.
Consider an individual who earns $95,000, has two children, pays $6,000 in child care expenses for one child, pays $19,000 in college tuition for the other child, pays $6,500 in mortgage interest (mortgage interest is tax deductible), and pays $9,600 in medical expenses. Medical expenses in excess of 7.5 percent of one's income are deductible. Personal exemptions are $3,050 per person (including the tax filer). When the individual's income is $30,000 or above, he/she gets a 12% child care credit. A college credit of 9% of tuition costs is given to those that have income less than $90,000. Her statutory marginal tax rate is 15 percent. What is her actual or effective marginal tax rate?
What will be an ideal response?
The graph above shows domestic supply and demand with trade in a SMALL country. With trade, this country can purchase at the world price, Pw. Suppose that this country imposes a $5 per unit tariff on this good. Which of the following will NOT occur?
A) Government revenue will increase. B) Domestic consumers will be worse off. C) Domestic producers will be better off. D) The gains to the winners will exceed the losses to the losers from the tariff.
If supply and demand both increase, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. uncertain; higher B. higher; higher C. lower; lower D. lower; uncertain