Question

QUESTION 6

1. Suppose a monopsonist is currently employing 10 workers and pays each of them $5. The wage paid to the additional worker is $7, and then the marginal expense of the 11^th worker is.

   		$50
   		$70
   		$77
   		$27

2 points   

QUESTION 7

1. Consider the simple leisure model in which the individual chooses between leisure (L) and money income (M). The marginal utility of leisure (MU_L) is 15 and the marginal utility of money (MU_M) is 3. At the optimum, the wage rate

   		$45
   		$0.20
   		$5
   		$15

2 points   

QUESTION 8

1. A curve that shows all of the alternative consumption bundles that the worker likes equally well is called

   		A budget constraint.
   		An indifference curve
   		An individual demand curve
   		A consumption bundle curve

2 points   

QUESTION 9

1. The budget set is _________ related to the nonlabor income and is __________ related to the wage.

   		positively and positively.
   		positively and negatively
   		negatively and positively.
   		negatively and negatively.

2 points   

QUESTION 10

1. The theory of household production assumes that the family derives utility from

   		income.
   		time spent in home production.
   		market purchased goods.
   		commodities ( meals, clean house, growth of children) produced by the family or purchased with family income.

2 points   

QUESTION 11

1. Marginal utility is

   		the change in a consumer's utility resulting from the addition of a very small amount of some good.
   		the total utility a resulting from consuming some good, divided by the amount consumed.
   		the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the amount added.
   		the change in a consumer's utility resulting from the addition of a very small amount of some good, divided by the total amount being consumed.

Answer 1

7) Solution: 5

Explanation: At optimum, the wage rate would be computed as marginal utility of leisure divided with the marginal utility of consumption. Thus MU_{L /} MU_M = 15/3 = 5

8) Solution: Indifference Curve

Explanation: Indifference Curve depicts the all alternative consumption bundles that the worker prefers equally

9) Solution: positively and positively

Explanation: C = [wages * hours of work] + non-labor income (V) ; thus positively related to the non-labor income and labor

10) Solution: commodities (meals, clean house, growth of children) produced by the family or purchased with family income

Explanation: In the household production model, it is assumed that income is to be spent on market-purchased product and services. The main types of goods considered in the utility function: household goods, market goods, and leisure

11) Solution: change in the consumer's utility resulting from the addition of a very small amount of some good, divided by the amount added.

Explanation: Marginal utility is computed as change in the utility of consumer resulting from the addition of certain good divided with the added amount