Mike’s Mealbarn is a competitive firm in the hot dog stand business. How will each of the following affect the short-run demand for labor at Mike's?
(i) Mike buys a new grill that makes the cooks more productive.
(ii) Increasing numbers of people become vegetarians.
(iii) A health inspector fines Mike $500 for unsanitary conditions, but fortunately Mike's customers don't learn about it.
(i) In this case, labor and capital are complements in production. The increased capital raises labor's marginal product, so the demand for labor increases.
(ii) The demand for hamburgers falls, which lowers the price of hamburgers. This price change causes a fall in labor's marginal revenue product, so the demand for labor decreases.
(iii) The $500 is a sunk cost. Neither the price of Mike's output nor the marginal product of labor have changed, so the short-run demand for labor is unaffected.
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A minimum wage policy induces an:
A) excess demand for labor. B) excess supply of labor. C) efficient market outcome. D) elastic labor supply response.
Which of the following factors explain why the world's trading nations have become increasingly interdependent, from an economic and political viewpoint, during the post-World War II era? Check all that apply.
A. The post-World War II baby boom B. The aging of the Western population C. The formations of the European Community and the Organization of Petroleum Exporting Countries D. The reindustrialization of Europe and Japan
Which of the following is not assumed in Real Business Cycle theory?
a) labor supply curves are relatively flat b) markets allocate resources efficiently c) economic expansions are caused by technological improvements d) recessions are caused by reductions in aggregate demand e) the marginal product of labor changes over the course of the business cycle
A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. What is the marginal cost of producing the computers that Pam can assemble during her 3rd hour of work?
A. $1,240 B. $5,520 C. $1,200 D. $5,400