8. If a profit-maximizing firm is a price taker in both the input and output markets, its marginal revenue product of labor is given by

a.the price of its output times labor's marginal physical productivity.

b.the marginal value product of labor.

c.the marginal revenue product of capital times the ratio of the wage rate to the rental rate on capital.

d.all of the above.

ANSWER:d

18. For a monopsonistic hirer of labor the gap between labor's marginal value product and its wage rate will be greater

a.the more elastic the supply curve for labor.

b.the more inelastic the supply curve for labor.

c.the more elastic the firm's demand for labor.

d.the more inelastic the firm's demand for labor.

ANSWER:b

20. Consider two situations: In situation A the production of widgets is monopolized by a single firm. In situation B the production of widgets is perfectly competitive. In both situations the supply of labor to widget makers is infinitely elastic at a wage ofw. Which of the following statements is true?

a.The marginal value product of labor will be the same in the two cases.

b.The marginal value product of labor is higher in case B than in case A.

c.The marginal value product of labor is higher in case A than in case B.

d.From the information given it is not possible to make a definite statement about the marginal value product of labor.

ANSWER:c

21. A monopolist union that desired to maximize its total wage bill () would offer that quantity of labor for which

a.labor's marginal productivity is zero.

b.labor's wage falls to zero.

c.the quantity of labor hired is as great as possible given the firm's demand curve.

d.the marginal revenue from providing one more worker to the market is zero.

ANSWER:d

23. When an individual's wage rises, the substitution effect tends to

a.increase hours worked.

b.decrease hours worked.

c.leave hours worked unchanged.

d.it is impossible to predict what will happen to hours worked.

ANSWER:a

25. If an individual's supply of labor curve is positively sloped throughout, then

a.the substitution effect always dominates the income effect.

b.the income effect always dominates the substitution effect.

c.the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels.

d.the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.

ANSWER:a

Notes: Please explain the answers to all the questions listed above. Solutions are already given but need explanations. Please do not copy solutions from those already posted. Show all the steps. Thank you so much!