The marginal product of labor (measured in units of output) for Expando Corp. is given by MPN = A(400 - N)where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $18?
A. 107
B. 197
C. 57
D. 397
Answer: D
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You find that to attract a sufficient number of workers you have to pay them more dollars. Given the price of your output you determine you are paying your workers more in goods than before. Which of the following has risen?
a. The real and nominal value of the wages you pay. b. The real but not the nominal value of wages you pay. c. The nominal but not the real value of the wages you pay. d. Neither the real nor the nominal value of the wages you pay.
A form of oligopoly in which a dominant firm sets the price and all smaller firms in the industry follow the dominant firm's pricing policy is called
A. a cartel. B. the price-leadership model. C. the Cournot model. D. the contestable markets model.
Compared to a perfectly competitive firm, the demand schedule of a monopolistically competitive firm faces is
A. perfectly price inelastic. B. less price elastic. C. perfectly price elastic. D. more price elastic.
A firm is currently producing an output at which price equals the minimum point on the average variable cost curve. If wage rates increase, the firm will
A) increase its rate of output to make up for the higher variable costs. B) shut down since it would no longer be covering its variable costs. C) decrease its rate of output to offset the higher variable costs. D) not make any changes since its current rate of output is still minimizing its losses.