Question

1. Suppose the federal government allows labor unions to act as the sole seller in labor markets, but the government collects a $1 per hour fee to cover unemployment insurance for each union worker. Assuming this fee is not so large that it forces the unions to disband, what is the impact of this fee on the equilibrium wage and employment level in the monopolized labor market?

After-tax wages increase and employment declines.

After-tax wages and employment decline.

No change in after-tax wages or employment levels.

Employment increases and after-tax wages decline.

2. Suppose the labor market is perfectly competitive, but the output market is not. When the labor market is in equilibrium, the wage rate will:

be greater than price times the marginal product of labor.

equal price times the marginal product of labor.

be less than price times the marginal product of labor.

None of the above is necessarily correct.

3. Scenario 14.4:   John's firm is a competitor in your product market and a monopsonist in the labor market. The current market price of the product that your firm produces is $2. The total product and marginal product of labor are given as:

TP = 100L - 0.125L 2 MP = 100 - 0.25L  

where L is the amount of labor employed. The supply curve for labor and the marginal expenditure curve for labor are given as follows:

L = P L -5 ME L = 2L + 5

Refer to Scenario 14.4. Suppose that the price of the product rises to $5. Which of the following curves shifts?

MP curve

Marginal expenditure curve

MRP curve

Supply of labor curve

Refer to Scenario 14.4. Suppose that a pollution tax is imposed on each unit of a firm's output. The number of workers hired

will not change.

will decrease.

will increase.

will change in an indeterminate fashion.

4, in the competitive output market for good Q, the marginal revenue product for an input X can be expressed as

MPX / TRQ.

APX MRQ.

MPX PQ

MPQ MRX.

Answer 1

1. (C) No change in after-tax wages or employment levels..

reason as this fee is not so large that it forces the unions to disband,so no changes will be there in the after tax wages and employment level.

2. (C) be less than price times the marginal product of labor.

reason since the labor market is perfectly competitive then wage will be given and accepted but output market is not competitive so marginal product with rise in labor supply will decrease so wage will also decrease, the labor will get wages equal to their MP what they have produced.

3. (C) MRP

when price rise in the marginal revenue of produce increase and this curve will be affect other curve will not affected by rise in prices.

Suppose that a pollution tax is imposed on each unit of a firm's output. The number of workers hired:

answer is (B) will decrease.

rise in population tax increase the cost of production so firm will decrease the no of labor hired.

4. (C )MPX PQ

the marginal revenue product for X can be expressed as :

MP of X * Price of output produced.