17–21
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Dif f i c u l t y :
02 Medium
Learning Objective: 17–02 Show how wage rates and employment levels are determined in
competitive labor markets.
Test Bank: I
Topi c :
A Purely Competitive Labor Market
39.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. This firm‘s product price is
A. $2.
40.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. The marginal revenue product of the second worker is
D. $4.
41.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. The marginal revenue product of the fourth worker is
D. $4.
17–23
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written consent of McGraw-Hill Education.
Type: Table
42.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. We can conclude from the information given that this firm is a
A. pure monopolist.
43.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. If the market wage rate is $8, this firm will employ
17–24
A. 2 workers.
44.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. If the market wage rate is $8 and the firm hires its profit-maximizing
number of workers, the firm’s total wage bill (payment) will be
A. $16.
45.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. If the market wage rate is $8 and the firm hires its profit-maximizing
number of workers, the firm’s total revenue will exceed its total wage payment by
D. $8.
46.
Quantity of Labor
Total Product
Total Revenue
1
4
$16
2
8
32
3
11
44
4
13
52
5
14
56
Refer to the given data. If this firm can hire as few or many workers as it wants at $8, it is
A. hiring labor in a monopsony labor market.
17–26
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written consent of McGraw-Hill Education.
D. selling its product in a purely competitive product market.
47. 1. W < MRP; W < MRC
2. W = MRP; W < MRC
3. W = MRP; W = MRC
4. W > MRP; W > MRC
Refer to the list. The outcome in a purely competitive labor market is shown by
A. 1.
48. 1. W < MRP; W < MRC
2. W = MRP; W < MRC
3. W = MRP; W = MRC
4. W > MRP; W > MRC
Refer to the list. The outcome in a monopsony labor market is shown by
17–27
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written consent of McGraw-Hill Education.
C. 3.
D. 4.
49. The labor supply curve facing a purely competitive employer is _, whereas the labor supply
curve facing a monopsonist is .
A. upsloping; horizontal
50.
Labor Demand Data
Labor Supply Data
Employment
Toatal Product
Product Price
Employment
Wage Rate
0
0
$2.20
0
—
1
15
2.00
1
$1.00
2
28
1.80
2
2.00
3
39
1.60
3
3.00
4
48
1.40
4
4.00
5
55
1.20
5
5.00
6
60
1.00
6
6.00
The table shows labor demand data on the left and labor supply data on the right. How many
workers will this profit-maximizing firm choose to employ?
A. 6
51.
Labor Demand Data
Labor Supply Data
Employment
Total Product
Product Price
Employment
Wage Rate
0
0
$2.20
0
—
1
15
2.00
1
$1.00
2
28
1.80
2
2.00
3
39
1.60
3
3.00
4
48
1.40
4
4.00
5
55
1.20
5
5.00
6
60
1.00
6
6.00
The table shows labor demand data on the left and labor supply data on the right. How many
units of output will this profit-maximizing firm produce?
D. 60
17–29
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Topi c :
Monopsony Model
Type: Table
52.
Labor Demand Data
Labor Supply Data
Employment
Total Product
Product Price
Employment
Wage Rate
0
0
$2.20
0
—
1
15
2.00
1
$1.00
2
28
1.80
2
2.00
3
39
1.60
3
3.00
4
48
1.40
4
4.00
5
55
1.20
5
5.00
6
60
1.00
6
6.00
The table shows labor demand data on the left and labor supply data on the right. What will be
the profit-maximizing wage rate?
A. $6.
53.
Labor Demand Data
Labor Supply Data
Employment
Total Product
Product Price
Employment
Wage Rate
0
0
$2.20
0
—
1
15
2.00
1
$1.00
2
28
1.80
2
2.00
3
39
1.60
3
3.00
17–30
4
48
1.40
4
4.00
5
55
1.20
5
5.00
6
60
1.00
6
6.00
The table shows labor demand data on the left and labor supply data on the right. What will be
the profit-maximizing selling price of the product?
D. $2.00.
54.
Labor Demand Data
Labor Supply Data
Employment
Total Product
Product Price
Employment
Wage Rate
0
0
$2.20
0
—
1
15
2.00
1
$1.00
2
28
1.80
2
2.00
3
39
1.60
3
3.00
4
48
1.40
4
4.00
5
55
1.20
5
5.00
6
60
1.00
6
6.00
The table shows labor demand data on the left and labor supply data on the right. We can
conclude that
D. the resource market is purely competitive, but the product market is imperfectly competitive.
55. The economic term for a firm that is the sole buyer in a market is
D. bilateral monopolist.
56. In a monopsonistic labor market, the employer will maximize profits by employing workers
up to that point at which
D. the wage rate equals marginal resource (labor) cost.
57. A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of
its employees to attract a seventh worker. The marginal wage cost of the seventh worker is
D. $21.
58. Suppose the MRP of a firm‘s 12th worker is $22 and the worker’s marginal wage cost is
$16. We can say with certainty that the firm
A. is hiring labor in a competitive labor market at a wage rate of $16.
59. In monopsony,
17–33
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Dif f i c u l t y :
02 Medium
Learning Objective: 17–03 Demonstrate how monopsony a market with a single employer can
reduce wages below competitive levels.
Test Bank: I
Topi c :
Monopsony Model
60. Which of the following is most likely to be an example of monopsony?
A. the market for fast-food workers in a large summer resort town
61. If a firm faces an upsloping labor supply curve (and there is no union or minimum wage), its
D. MRP curve is also upsloping.
62. A monopsonist’s wage cost in hiring an additional worker is the
A. worker’s wage rate.
17–34
63. A monopsonistic employer
A. has a perfectly elastic labor supply curve.
64. Other things equal, the monopsonistic employer will pay a
D. higher wage rate and hire a larger number of workers than will a purely competitive
employer.
65. Assume the Ajax Mining Company hires 80 percent of the nonunion labor force of Mother
Lode, New Mexico. Also, suppose that this labor force is highly immobile. Economists would
describe this employer as a(n)
A. monopolist.
66. A monopsonistic employer in an unorganized (nonunion) labor market will
curves.
D. pay a wage rate in excess of labor’s MRP.
67. As compared to a purely competitive labor market, in a nonunionized monopsonistic labor
market, wages
D. and employment will both be higher.
17–36
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Dif f i c u l t y :
02 Medium
Learning Objective: 17–03 Demonstrate how monopsony a market with a single employer can
reduce wages below competitive levels.
Test Bank: I
Topi c :
Monopsony Model
68. “Player drafts” of professional athletes
A. increase the competitiveness of the labor market for professional athletes.
69. Which of the following is not correct?
A. Other things equal, a monopsonist will pay a lower wage rate than will a firm hiring labor
competitively.
70. A monopsonistic employer’s marginal resource (labor) cost curve
A. is always more elastic than the labor supply curve.
71. The critical feature of a monopsonistic labor market is that the employer
A. has a perfectly elastic demand curve for labor.
72. If a firm is a monopsonist in the hiring of both labor and capital, it will obtain the profit–
maximizing quantities of labor and capital when
A. MRPL / PL = MRPC /PC = 1.
17–38
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 17–03 Demonstrate how monopsony a market with a single employer can
reduce wages below competitive levels.
Test Bank: I
Topi c :
Monopsony Model
73. If a firm is hiring variable resources D and F in imperfectly competitive input markets, it
will maximize profits by employing D and F in such quantifies that
D. MRPD / PD = MRPF / PF.
74.
Wage Rate
Quantity Supplied
$5
1
10
2
15
3
20
4
25
5
Refer to the given supply information facing a single firm in a particular labor market. This
labor supply curve demonstrates that
A. the firm is selling its output under imperfectly competitive conditions.
17–39
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Dif f i c u l t y :
02 Medium
Learning Objective: 17–03 Demonstrate how monopsony a market with a single employer can
reduce wages below competitive levels.
Test Bank: I
Topi c :
Monopsony Model
Type: Table
75.
Wage Rate
Quantity Supplied
$5
1
10
2
15
3
20
4
25
5
Refer to the given supply information facing a single firm in a particular labor market. The
marginal resource (labor) cost of the third worker is
A. $15.
76. Empirical studies suggest that, other things equal, the smaller the number of hospitals in a
city, the lower are nurses’ wages. This is evidence that
A. the labor markets of nurses are purely competitive.
77.
If the diagram were relevant to an individual firm, we could conclude that the firm is
A. a pure competitor in hiring labor.