Question

Consider the short-run. As a firm hires more labor, total output ___ and the marginal product of labor ___.

rises; falls

falls;rises

falls;falls

rises;rises

Consider the short-run. As the firm hires more labor, average output per laborer ___.

remains unchanged

falls

rises

Consider ACME, a monopoly (not a natural monopoly) in the production of rocket skates. The rocket skates industry hired 5,041 workers last year. All else equal, if antitrust authorities were to break up this monopoly (creating a perfectly competitive rocket skate market), employment in the rocket skates industry would most likely ___.

remain unchanged

fall

rise

Consider the long-run decision of a firm. Suppose that the substitution effect is greater than the scale effect. As wages fall, all else equal, employment of labor ___ and employment of capital ___.

rises; rises

falls; rises

falls; falls

rises; falls

Consider the long-run decision of a firm. Suppose that the scale effect is greater than the substitution effect. As capital prices rise, all else equal, employment of labor ___ and employment of capital ___.

falls; rises

rises; falls

falls; falls

rises; rises

Answer 1

Answer : Option A is correct. In the short run as firm should hired more labour total output rises and the Marginal product of the labour falls. It means that when more labour is hired than Marginal product has been started declining.

Answer : Option B is correct. As firms hires more labour than average output per labour has been falling. It means that average workers output has been declined.

Answer : Option A is correct. When ACME firm i.e monopoly has been break into perfect competition than employment in the rocket state industry is remain unchanged. It means that employment level remaim same as demand remain unchanged.

Answer : Option D is correct. Consider the long run decision of the firm than substitution effect is greater than the scale effect. It is result in that as wages falls employment of labour rises and employment of capital declining.

Answer : Option B is correct. As scale effect, encourages firms to expand there employment which show employment increases and employment of capital decrease.