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Monopsony power is akin to an age-old proposition in economics that scarcity brings

Monopsony power is akin to an age-old proposition in economics that scarcity brings
                            power, except in this case power is due to scarce

a.resources

b.input purchases

c.suppliers

d.purchasing time

e.product market

 

Exhibit P-1.  Susie’s Cream Ale Factory Data

Labor

Wage

Total Product (cases)

0

0

10

$10

100

20

$12

210

30

$14

290

40

$16

340

50

$18

360

60

$20

370

NOTE: The product price is $12 per case and this product is exchanged in a perfectly competitive output market.

     

 

2.              Susie’s Cream Ale Factory has collected the information shown in Exhibit P-1 pertaining
                            to her business in a small rural community.  She sells her product for $12 per case in a
                            highly competitive micro brewery market.  Susie should hire ______ workers.

a.20

b.30

c.40

d.50

e.60

3.              Referring to the data in Exhibit P-1 for Susie’s Cream Ale Factory, the marginal revenue
                            product of the 30th worker is

a.14

b.18

c.96

d.16

e.60

4.              In Exhibit P-1 for Susie’s Cream Ale Factory the marginal labor cost of the 50th worker is

a.18

b.26

c.640

d.900

e.22

5.              According to Exhibit P-1, if Susie’s Cream Ale Factory chooses to produce 210 cases of
                            ale, the marginal revenue from the last case will be

a.132

b.10

c.12

d.14

e.120

6.              If the price of cream ale rises to $15 per case, what will the marginal revenue product of
                            Susie’s 40th worker be (refer to Exhibit P-1)?

a.75

b.600

c.60

d.750

e.16

7.              For a monopsonist, the supply of labor facing the firm is

a.an insignificant portion of the labor market’s supply

b.perfectly horizontal

c.downward sloping

d.the summation of each firm’s demand for labor

e.identical to the supply curve facing the labor market for the industry

8.              If the supply curve of labor facing a firm is upward sloping, this implies that

a.the firm is unable to hire additional workers

b.to hire additional workers, the firm must increase the wage rate

c.any number of workers can be hired at a fixed wage

d.additional workers can be hired at lower wage rates

e.the demand curve for the firm’s good must be horizontal

9.              The supply of labor does not depend upon

a.the demand for labor

b.the amount of wealth held by workers

c.the size of the population

d.alternative employment opportunities

e.the location of the work place

10.              For a monopsonist

a.wage rate > TLC

b.wage rate > MLC

c.wage rate = MLC

d.wage rate = MRP

e.wage rate

Dec 12 2019 View more View Less

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