Question

QUESTION 12

1. In positive economic models of the labor market, it is assumed that

   		workers maximize utility (happiness).
   		firms maximize profits.
   		resources are scarce.
   		all of these are true.

2 points   

QUESTION 13

1. Because of the principle of __________, marginal product of labor decreases as labor increases.

   		economies of scale.
   		diseconomies of scale.
   		diminishing returns.
   		constant returns to scale.

2 points   

QUESTION 14

1. The unemployment rate is computed as

   		the number of employed divided labor force.
   		the number of unemployed divided the number of employed.
   		the number of unemployed divided labor force.
   		the sum of the numbers of unemployed and employed divided labor force.

2 points   

QUESTION 15

1. Suppose the labor demand equation and labor supply equation: L_S = 100 + W and L_D =400 -2*W where L_S = quantity supplied of labor, L_D = quantity demanded for labor and W = wage. The equilibrium employment is _________ workers.

   		50
   		100
   		200
   		300

2 points   

QUESTION 16

1. Suppose a firm is operating in both a perfectly competitive product market and perfectly labor market. The firm’s short run production is Q = L²; where Q is output and L is labor, expressed in millions. Marginal product of labor (MP_L) = 2L and wage is 10. The price of the product is $ 2. Based on information above, the marginal revenue (MR) is

   		$0.2
   		$10
   		$5
   		$2

2 points   

QUESTION 17

1. Suppose the marginal product of labor (MP_L) = 100 – L, price of labor (wage) = $ 4 and the product price (P) = $ 2. In the short run, the optimal level of labor is

   		96
   		98
   		99
   		0

Answer 1