Labor Demand. Labor Economics VSE Praha March 2009


 Steven Ross
 11 months ago
 Views:
Transcription
1 Labor Demand Labor Economics VSE Praha March 2009
2 Labor Economics: Outline Labor Supply Labor Demand Equilibrium in Labor Market et cetera
3 Labor Demand Model: Firms Firm s role in: Labor Market consumes labor Capital Market consumes capital Product (output) Market supplies its output
4 Labor Demand Model: Firms Markets are competitive: firms are price takers. Competitive Markets Assumptions: Firms can hire at a constant wage rate w unlimited labor hours (L) Firms can rent at a constant rental rate r unlimited amounts of capital () Firms can sell at a constant price p unlimited amounts of a single good (q).
5 Production Function Function: q=f(l, ) More output with more inputs: MP L f ( L, ) L 0 Marginal Product of Labor (MP L ) is the change in output resulting from hiring an additional worker, holding constant the quantities of all other inputs.
6 Marginal Product and Average Product Average Product of Labor (AP L ) is the amount of output produced by the typical worker. AP L = q/l Marginal Product of Capital (MP ) is the change in output resulting from oneunit increase in the capital stock, holding constant the quantities of all other inputs. MP f ( L, ) 0
7 Marginal Product and Average Product
8 Graphical Interpretation
9 SR: How many workers should the firm hire?
10 The Employment Decision Firm s problem: max L pf ( L, ) wl r Solution: 1. Partial derivative with respect to L p f ( L, ) L w
11 Problem Suppose the production function is given by F( L) 6L 2/3 How many units of labor will the firm hire, if the cost per unit of labor is 12 and the price of output is 6?
12 Firm s problem Hire labor so that the value of marginal product is equal to the wage. and how much capital to rent?
13 The Employment Decision in the LR Isoquants: Similar to ICs (MRS): the slope of the isoquant at any given point is the marginal rate of technical substitution MRTS= L MP MP L
14 Isocosts Isocost line: equally costly combinations of L and. C = wl + r C 1 >C 0 Slope of isocost: C r w r L
15 Cost Minimization: graph (Wage = $10 per Hour; Price of a Unit of Capital = $20)
16 Cost Minimization min L, wl r s.t. f ( L, ) q Solution: the slope of isoquant = the slope of isocost w r MP MP L
17 Profit Maximization = pq wl r Firms CHOOSE L and to max, but NOT CHOOSE prices (w and r) and output (q). max L, pq wl r s.t. q f ( L, ) max L, pf ( L, ) wl r
18 The Employment Decision max L, pf ( L, ) wl Deriving first order conditions: 1. Partial derivative with respect to L r p f ( L, ) L w 2. Partial derivative with respect to f ( L, ) p r 3. Solve two equations for two unknowns: L*(w,r,p), *(w,r,p) q* = f(l*(w,r,p), *(w,r,p))
19 Changes in cost of inputs: w
20 Changes in cost of inputs: w Two simultaneous changes in capital labor ratio production size
21 Substitution and Scale Effects
22 Elasticity of Substitution The elasticity of substitution indicates how easily firms can change their input mix as relative input prices change. Note: for profit maximization w/r=mrts 0: higher values of indicate that the firm can more easily substitute inputs as the relative input prices change. L r w r w L r w L / / ) / ( ) / ( or ) / ( % ) / ( % L MRTS MRTS L MRTS L / ) ( ) / ( or ) ( % ) / ( %
23 Elasticity of Substitution is determined by the production function! q 0 =al + b q 0 =min{cl, d}
24 Elasticity of Labor Demand The elasticity of demand is defined as the percentage change in quantity resulting from a percentage change in price. % L*( w, r, % w p) or L*( w, r, w p) w L* It is a measure of how responsive employment is to a change in the wage.
25 Elasticity of Labor Demand = 0 perfectly inelastic demand; 1< < 0 inelastic demand; = 1 unit elastic labor demand; < 1 elastic labor demand; =  perfectly elastic demand.
26 Elasticity of Labor Demand Perfectly inelastic demand: L/ w w/l=0 Same employment is demanded at any wage. Perfectly elastic demand: L/ w w/l =  No labor is demanded above market wage.
27 Elasticity of Labor Demand Inelastic demand 1 < L/ w w/l < 0 % in L < % in w. Elastic demand L/ w w/l < 1 % in L > % in w. Unit Elastic demand L/ w w/l=1 % in L = % in w.
28 Policy Application: Minimum wage
29 Policy Application: Minimum wage If the labor demand elasticity with respect to wages is low, the employment effects of min wages are low. Extreme cases: If labor demand is perfectly inelastic? If labor demand is perfectly elastic? Reality? somewhere between extreme cases
NAME: INTERMEDIATE MICROECONOMIC THEORY SPRING 2008 ECONOMICS 300/010 & 011 Midterm II April 30, 2008
NAME: INTERMEDIATE MICROECONOMIC THEORY SPRING 2008 ECONOMICS 300/010 & 011 Section I: Multiple Choice (4 points each) Identify the choice that best completes the statement or answers the question. 1.
More informationPART A: For each worker, determine that worker's marginal product of labor.
ECON 3310 Homework #4  Solutions 1: Suppose the following indicates how many units of output y you can produce per hour with different levels of labor input (given your current factory capacity): PART
More informationor, put slightly differently, the profit maximizing condition is for marginal revenue to equal marginal cost:
Chapter 9 Lecture Notes 1 Economics 35: Intermediate Microeconomics Notes and Sample Questions Chapter 9: Profit Maximization Profit Maximization The basic assumption here is that firms are profit maximizing.
More informationCHAPTER 7 THE COST OF PRODUCTION
CHAPTER 7 THE COST OF PRODUCTION EXERCISES 1. Assume a computer firm s marginal costs of production are constant at $1,000 per computer. However, the fixed costs of production are equal to $10,000. a.
More informationChapter 5 The Production Process and Costs
Managerial Economics & Business Strategy Chapter 5 The Production Process and Costs McGrawHill/Irwin Copyright 2010 by the McGrawHill Companies, Inc. All rights reserved. Overview I. Production Analysis
More informationProduction Functions
Short Run Production Function. Principles of Microeconomics, Fall ChiaHui Chen October, ecture Production Functions Outline. Chap : Short Run Production Function. Chap : ong Run Production Function. Chap
More informationLabour is a factor of production, and labour, like other factors, such as capital (machinery, etc) are demanded by firms for production purposes.
Labour Demand Labour is a factor of production, and labour, like other factors, such as capital (machinery, etc) are demanded by firms for production purposes. The quantity of labour demanded depends on
More informationAP Microeconomics Chapter 12 Outline
I. Learning Objectives In this chapter students will learn: A. The significance of resource pricing. B. How the marginal revenue productivity of a resource relates to a firm s demand for that resource.
More informationProfit and Revenue Maximization
WSG7 7/7/03 4:36 PM Page 95 7 Profit and Revenue Maximization OVERVIEW The purpose of this chapter is to develop a general framework for finding optimal solutions to managerial decisionmaking problems.
More informationMicroeconomics Instructor Miller Practice Problems Labor Market
Microeconomics Instructor Miller Practice Problems Labor Market 1. What is a factor market? A) It is a market where financial instruments are traded. B) It is a market where stocks and bonds are traded.
More informationSHORTRUN PRODUCTION
TRUE OR FALSE STATEMENTS SHORTRUN PRODUCTION 1. According to the law of diminishing returns, additional units of the labour input increase the total output at a constantly slower rate. 2. In the shortrun
More informationTable of Contents MICRO ECONOMICS
economicsentrance.weebly.com Basic Exercises Micro Economics AKG 09 Table of Contents MICRO ECONOMICS Budget Constraint... 4 Practice problems... 4 Answers... 4 Supply and Demand... 7 Practice Problems...
More informationMonopoly and Monopsony Labor Market Behavior
Monopoly and Monopsony abor Market Behavior 1 Introduction For the purposes of this handout, let s assume that firms operate in just two markets: the market for their product where they are a seller) and
More informationCosts. Accounting Cost{stresses \out of pocket" expenses. Depreciation costs are based on tax laws.
Costs Accounting Cost{stresses \out of pocket" expenses. Depreciation costs are based on tax laws. Economic Cost{based on opportunity cost (the next best use of resources). 1. A selfemployed entrepreneur's
More information2. Efficiency and Perfect Competition
General Equilibrium Theory 1 Overview 1. General Equilibrium Analysis I Partial Equilibrium Bias 2. Efficiency and Perfect Competition 3. General Equilibrium Analysis II The Efficiency if Competition The
More information8. Average product reaches a maximum when labor equals A) 100 B) 200 C) 300 D) 400
Ch. 6 1. The production function represents A) the quantity of inputs necessary to produce a given level of output. B) the various recipes for producing a given level of output. C) the minimum amounts
More informationPOTENTIAL OUTPUT and LONG RUN AGGREGATE SUPPLY
POTENTIAL OUTPUT and LONG RUN AGGREGATE SUPPLY Aggregate Supply represents the ability of an economy to produce goods and services. In the Longrun this ability to produce is based on the level of production
More informationChapter 14. Markets for Factor Inputs
Chapter 14 Markets for Factor Inputs Competitive Factor Markets Characteristics 1. Large number of sellers of the factor of production 2. Large number of buyers of the factor of production 3. The buyers
More informationMODULE 70: THE MARKETS FOR
MODULE 70: THE MARKETS FOR LAND & CAPITAL SCHMIDTY SCHOOL OF ECONOMICS THE PURPOSE OF THIS MODULE IS TO SHOW HOW WE CAN USE SUPPLY AND DEMAND TO MODEL THE MARKETS FOR THE LAND AND CAPITAL INPUTS. Learning
More informationAgenda. Productivity, Output, and Employment, Part 1. The Production Function. The Production Function. The Production Function. The Demand for Labor
Agenda Productivity, Output, and Employment, Part 1 31 32 A production function shows how businesses transform factors of production into output of goods and services through the applications of technology.
More informationPreTest Chapter 25 ed17
PreTest Chapter 25 ed17 Multiple Choice Questions 1. Refer to the above graph. An increase in the quantity of labor demanded (as distinct from an increase in demand) is shown by the: A. shift from labor
More informationPerfect Competition. ECON 212 Lecture 13. Tianyi Wang. Queen s Univeristy. Winter 2013
Perfect Competition ECON 212 Lecture 13 Tianyi Wang Queen s Univeristy Winter 2013 Tianyi Wang (Queen s Univeristy) ECON 212 Lecture 13 Winter 2013 1 / 12 Intro We can analyze firm s supply decision. Firm
More informationSample Midterm Solutions
Sample Midterm Solutions Instructions: Please answer both questions. You should show your working and calculations for each applicable problem. Correct answers without working will get you relatively few
More informationCASE FAIR OSTER PEARSON
CASE FAIR OSTER PEARSON Publishing as Prentice Hall PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N Prepared by: Fernando Quijano w/shelly Tefft 2of 35 Input Demand: The Labor and Land Markets
More informationMICROECONOMICS AND POLICY ANALYSIS  U8213 Professor Rajeev H. Dehejia Class Notes  Spring 2001
MICROECONOMICS AND POLICY ANALYSIS  U8213 Professor Rajeev H. Dehejia Class Notes  Spring 2001 General Equilibrium and welfare with production Wednesday, January 24 th and Monday, January 29 th Reading:
More informationProductioin OVERVIEW. WSG5 7/7/03 4:35 PM Page 63. Copyright 2003 by Academic Press. All rights of reproduction in any form reserved.
WSG5 7/7/03 4:35 PM Page 63 5 Productioin OVERVIEW This chapter reviews the general problem of transforming productive resources in goods and services for sale in the market. A production function is the
More informationManagerial Economics & Business Strategy Chapter 8. Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets
Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets I. Perfect Competition Overview Characteristics and profit outlook. Effect
More informationMarginal Functions in Economics
Marginal Functions in Economics One of the applications of derivatives in a real world situation is in the area of marginal analysis. Marginal analysis uses the derivative (or rate of change) to determine
More informationReview. Objective: Derive firm s Supply curve
Review Objective: Derive firm s Supply curve Price 700 Eu 400 Eu Supply Review: 1. What is a production function? 2. What is the marginal product of some input? 3. What is the MRTS? 4. What are decreasing
More informationLecture 2. Marginal Functions, Average Functions, Elasticity, the Marginal Principle, and Constrained Optimization
Lecture 2. Marginal Functions, Average Functions, Elasticity, the Marginal Principle, and Constrained Optimization 2.1. Introduction Suppose that an economic relationship can be described by a realvalued
More information19 : Theory of Production
19 : Theory of Production 1 Recap from last session Long Run Production Analysis Return to Scale Isoquants, Isocost Choice of input combination Expansion path Economic Region of Production Session Outline
More informationChapter 11 Perfect Competition
Chapter 11 Perfect Competition Perfect Competition Conditions for Perfectly competitive markets Product firms are perfect substitutes (homogeneous product) Firms are price takers Reasonable with many firms,
More informationAn increase in the number of students attending college. shifts to the left. An increase in the wage rate of refinery workers.
1. Which of the following would shift the demand curve for new textbooks to the right? a. A fall in the price of paper used in publishing texts. b. A fall in the price of equivalent used text books. c.
More informationProfit Maximization. PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University
Profit Maximization PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 The Nature and Behavior of Firms A firm An association of individuals Firms Who have organized themselves
More informationThe Revenue of a Competitive In perfect competition, average revenue equals the price of the good. Total revenue Average Revenue = = The Revenue of a
In this chapter, look for the answers to these questions: What is a perfectly competitive market? What is marginal revenue? How is it related to total and average revenue? How does a competitive firm determine
More information14.01 Principles of Microeconomics, Fall 2007 ChiaHui Chen October 15, 2007. Lecture 13. Cost Function
ShortRun Cost Function. Principles of Microeconomics, Fall ChiaHui Chen October, ecture Cost Functions Outline. Chap : ShortRun Cost Function. Chap : ongrun Cost Function Cost Function et w be the
More informationAP Microeconomics Review
AP Microeconomics Review 1. Firm in Perfect Competition (LongRun Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry 3. Natural Monopoly with FairReturn
More informationProt Maximization and Cost Minimization
Simon Fraser University Prof. Karaivanov Department of Economics Econ 0 COST MINIMIZATION Prot Maximization and Cost Minimization Remember that the rm's problem is maximizing prots by choosing the optimal
More informationProblem Set Chapter 6 Solutions
Problem Set Chapter 6 Solutions. Ch 6, Problem 6. A firm uses the inputs of fertilizer, labor, and hothouses to produce roses. Suppose that when the quantity of labor and hothouses is fixed, the relationship
More informationChapter 8. Competitive Firms and Markets
Chapter 8. Competitive Firms and Markets We have learned the production function and cost function, the question now is: how much to produce such that firm can maximize his profit? To solve this question,
More informationModule 2 Lecture 5 Topics
Module 2 Lecture 5 Topics 2.13 Recap of Relevant Concepts 2.13.1 Social Welfare 2.13.2 Demand Curves 2.14 Elasticity of Demand 2.14.1 Perfectly Inelastic 2.14.2 Perfectly Elastic 2.15 Production & Cost
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 11 Monopoly practice Davidson spring2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly industry is characterized by 1) A)
More informationOnline Review Copy. AP Micro Chapter 8 Test. Multiple Choice Identify the choice that best completes the statement or answers the question.
AP Micro Chapter 8 Test Multiple Choice Identify the choice that best completes the statement or answers the question. 1. There would be some control over price within rather narrow limits in which market
More informationEmployment and Pricing of Inputs
Employment and Pricing of Inputs Previously we studied the factors that determine the output and price of goods. In chapters 16 and 17, we will focus on the factors that determine the employment level
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that
More informationChapter 7. Costs. C = FC + VC Marginal cost MC = C/ q Note that FC will not change, so marginal cost also means marginal variable cost.
Chapter 7. Costs Shortrun costs Longrun costs Lowering costs in the longrun 0. Economic cost and accounting cost Opportunity cost : the highest value of other alternative activities forgone. To determine
More informationChapter 3 A Classical Economic Model
Chapter 3 A Classical Economic Model what determines the economy s total output/income how the prices of the factors of production are determined how total income is distributed what determines the demand
More informationTheoretical Tools of Public Economics. Part2
Theoretical Tools of Public Economics Part2 Previous Lecture Definitions and Properties Utility functions Marginal utility: positive (negative) if x is a good ( bad ) Diminishing marginal utility Indifferences
More informationA. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost.
1. The supply of gasoline changes, causing the price of gasoline to change. The resulting movement from one point to another along the demand curve for gasoline is called A. a change in demand. B. a change
More informationc 2009 Je rey A. Miron
Lecture 22: Factor Markets c 2009 Je rey A. Miron Outline 1. Introduction 2. Monopoly in the Output Market 3. Monopsony 4. Upstream and Downstream Monopolies 1 Introduction The analysis in earlier lectures
More informationc. Given your answer in part (b), what do you anticipate will happen in this market in the longrun?
Perfect Competition Questions Question 1 Suppose there is a perfectly competitive industry where all the firms are identical with identical cost curves. Furthermore, suppose that a representative firm
More informationMultiple Choice Questions for Self Study. (GZ der VWL / Introduction to Economics)
Multiple Choice Questions for Self Study (GZ der VWL / Introduction to Economics) ao. Prof. Dr. B. Yurtoglu) Economic Models 1) The purpose of making assumptions in economic model building is to (a) force
More informationAP Microeconomics Unit V: The Factor (Resource) Market Problem Set #5
1. /15 2. /20 3. /15 4. /25 Total: /75 Name: Team: AP Microeconomics Unit V: The Factor (Resource) Market Problem Set #5 1. ( /15) Define the term and explain a situation that demonstrates the real world
More informationCHAPTER SEVEN THE THEORY AND ESTIMATION OF COST
CHAPTER SEVEN THE THEORY AND ESTIMATION OF COST The production decision has to be based not only on the capacity to produce (the production function) but also on the costs of production (the cost function).
More informationHow Wages Are Determined in Labor Markets
ACTIVITY 45 How Wages Are Determined in Labor Markets This activity examines how wages and employment are determined in two types of labor s. A perfectly competitive labor is one in which all buyers and
More informationDEMAND AND SUPPLY IN FACTOR MARKETS
Chapter 14 DEMAND AND SUPPLY IN FACTOR MARKETS Key Concepts Prices and Incomes in Competitive Factor Markets Factors of production (labor, capital, land, and entrepreneurship) are used to produce output.
More informationIntermediate Microeconomics. Chapter 13 Monopoly
Intermediate Microeconomics Chapter 13 Monopoly Noncompetitive market Price maker = economic decision maker that recognizes that its quantity choice has an influence on the price at which it buys or sells
More informationManagerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay. Lecture  14 Elasticity of Supply
Managerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay Lecture  14 Elasticity of Supply We will continue our discussion today, on few more concept of
More informationc 2007 Je rey A. Miron
Lecture 23: Factor Markets. c 2007 Je rey A. Miron Outline 1. Introduction 2. Monopoly in the Output Market 3. Monopsony 4. Upstream and Downstream Monopolies 1 Introduction The analysis in earlier lectures
More informationShortRun Production and Costs
ShortRun Production and Costs The purpose of this section is to discuss the underlying work of firms in the shortrun the production of goods and services. Why is understanding production important to
More informationEconomics 201 Fall 2010 Introduction to Economic Analysis Problem Set #6 Due: Wednesday, November 3
Economics 201 Fall 2010 Introduction to Economic Analysis Jeffrey Parker Problem Set #6 Due: Wednesday, November 3 1. Cournot Duopoly. Bartels and Jaymes are two individuals who one day discover a stream
More informationEconS 301 Review Session #8 Chapter 11: Monopoly and Monopsony
EconS 301 Review Session #8 Chapter 11: Monopoly and Monopsony 1. Which of the following describes a correct relation between price elasticity of demand and a monopolist s marginal revenue when inverse
More informationLecture 8: Market Structure and Competitive Strategy. Managerial Economics September 11, 2014
Lecture 8: Market Structure and Competitive Strategy Managerial Economics September 11, 2014 Focus of This Lecture Examine optimal price and output decisions of managers operating in environments with
More informationEcon674 Economics of Natural Resources and the Environment
Econ674 Economics of Natural Resources and the Environment Session 5 Static Static Optimization Optimization means the best use of a given stock of resources to achieve a given end. Best use generally
More informationChapter 8 Online Appendix: The Calculus of LongRun Competitive Equilibria
Chapter 8 Online Appendix: The Calculus of LongRun Competitive Equilibria The chapter presents the longrun competitive equilibrium using graphs and intuition. In this appendix, we learn how to solve
More information1 st Exam. 7. Cindy's crossprice elasticity of magazine demand with respect to the price of books is
1 st Exam 1. Marginal utility measures: A) the total utility of all your consumption B) the total utility divided by the price of the good C) the increase in utility from consuming one additional unit
More informationUNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition
UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES Monopolistic Competition Market Structure Perfect Competition Pure Monopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on
More informationLearning Objectives. After reading Chapter 11 and working the problems for Chapter 11 in the textbook and in this Workbook, you should be able to:
Learning Objectives After reading Chapter 11 and working the problems for Chapter 11 in the textbook and in this Workbook, you should be able to: Discuss three characteristics of perfectly competitive
More informationDawg Tags quantity TVC MC TFC TC ATC 1 $5 $
Exam 2 ECNS 204 Microeconomics Spring 2013 Instructor: Eric Belasco Name Belasco KEY 1. (35 points, 5 points each) You run a company called Dawg Tags, which prints dog tags and resides in a perfectly competitive
More informationSAMPLE FINAL. Part I  Multiple Choice Questions:
Part I  Multiple Choice Questions: SAMPLE FINAL 1. Which of the following is not a characteristic of a perfectly competitive market? a. Firms are price takers. b. Firms have difficulty entering the market.
More informationIntegrating the Input Market and the Output Market when Teaching Introductory Economics
1 Integrating the Input Market and the Output Market when Teaching Introductory Economics May 2015 Clark G. Ross Frontis Johnston Professor of Economics Davidson College Box 7022 Davidson, NC 280357022
More informationUnit 7: Factor Markets
Unit 7: Factor Markets Factor Market Markets in which the factors of production are bought and sold. A factor input is either land, labor, capital, or entrepreneurship Entrepreneurship is not purchased
More informationChapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets
Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets McGrawHill/Irwin Copyright 2010 by the McGrawHill Companies, Inc. All
More informationA firm in a competitive market has fixed costs of 20 and the following marginal costs for item #N: Item #
Microeconom ics m odule 11: m arginal costs, value, and revenue (practice problem s) ** Exercise 11.1: Shutdown Price A firm in a competitive market has fixed costs of 0 and e following marginal costs
More informationNumber of Workers Number of Chairs 1 10 2 18 3 24 4 28 5 30 6 28 7 25
Intermediate Microeconomics Economics 435/735 Fall 0 Answers for Practice Problem Set, Chapters 68 Chapter 6. Suppose a chair manufacturer is producing in the short run (with its existing plant and euipment).
More informationWhat are the conditions that lead to a perfectly competitive market?
Review: Lecture 1. Idea of constrained optimization. Definitions of economics. Role of marginal analysis. Economics as a way to explain. Also used to predict. Chapter 1 and 2. What is a market? What are
More informationChapter 9: Perfect Competition
Chapter 9: Perfect Competition Perfect Competition Law of One Price ShortRun Equilibrium LongRun Equilibrium Maximize Profit Market Equilibrium Constant Cost Industry Increasing Cost Industry Decreasing
More informationC H A P T E R 8. Profit Maximization and Competitive Supply CHAPTER OUTLINE
C H A P T E R 8 Profit Maximization and Competitive Supply CHAPTER OUTLINE 8.1 Perfectly Competitive Markets 8.2 Profit maximization 8.3 Marginal Revenue, Marginal Cost, and Profit Maximization 8.4 Choosing
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) It is efficient to produce an additional shirt if A) the marginal benefit of producing the shirt
More informationThe Labour Market: Demand and Supply
The Labour Market: Demand and Supply Learning Objectives Understand that the demand for a factor of production such as labour is derived from the demand for the product and that it will be influenced by
More information5. The supply curve of a monopolist is A) upward sloping. B) nonexistent. C) perfectly inelastic. D) horizontal.
Chapter 12 monopoly 1. A monopoly firm is different from a competitive firm in that A) there are many substitutes for a monopolist's product but there are no substitutes for a competitive firm's product.
More informationPPA 723, Fall 2006 Professor John McPeak
Quiz One PPA 723, Fall 2006 Professor John McPeak Name: The total quiz is worth 20 points. Each question is worth 2 points, and each sub question is worth an equal share of the two points. 1) The demand
More informationMicroeconomics Instructor Miller Practice Problems Monopolistic Competition
Microeconomics Instructor Miller Practice Problems Monopolistic Competition 1. A monopolistically competitive market is described as one in which there are A) a few firms producing an identical product.
More informationStudent Name: Date: Teacher Name: Heather Creamer. Score:
Economics EOC Quiz Answer Key Microeconomic Concepts  (SSEMI1) Flow Of Goods, (SSEMI2) Law Of Demand, (SSEMI3) Economic Behavior, (SSEMI4) Organization And Role Of Business Student Name: Teacher Name:
More informationSample Exam According to Figure 6.1, A. Soup is a normal good C. Soup is a Giffen good B. Soup is an inferior good D. Bread is an inferior good
Sample Exam 2 1. Suppose the base year for a Lespeyres index is 2001. The value of the index is 1.3 in 2004 and 1.6 in 2006. By how much did the cost of the bundle increase between 2004 and 2006? A..3%
More informationSolution to Selected Questions: CHAPTER 12 MONOPOLISTIC COMPETITION AND OLIGOPOLY
Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy 900 (Section ) Chairat Aemkulwat Economics I: Microeconomics Spring 05 Solution to Selected Questions: CHAPTER MONOPOLISTIC
More informationProfit Maximization. 2. product homogeneity
Perfectly Competitive Markets It is essentially a market in which there is enough competition that it doesn t make sense to identify your rivals. There are so many competitors that you cannot single out
More informationAP MICRO Week 4 Practice Quiz: M, 20
1 1. A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about
More informationLabor Economics. Unit 3. Labor Demand
20161 Labor Economics Unit 3. Labor Demand Prof. Minjung, Kim Department of Economics Wonkwang University Textbook : Modern Labor Economics: Theory and Public policy written by Ronald G. Ehrenberg This
More informationECON 103, 20082 ANSWERS TO HOME WORK ASSIGNMENTS
ECON 103, 20082 ANSWERS TO HOME WORK ASSIGNMENTS Due the Week of July 14 Chapter 11 WRITE: [2] Complete the following labour demand table for a firm that is hiring labour competitively and selling its
More informationA Detailed Price Discrimination Example
A Detailed Price Discrimination Example Suppose that there are two different types of customers for a monopolist s product. Customers of type 1 have demand curves as follows. These demand curves include
More informationSupply and Demand. A market is a group of buyers and sellers of a particular good or service.
Supply and Demand A market is a group of buyers and sellers of a particular good or service. The definition of the good is a matter of judgement: Should different locations entail different goods (and
More informationUNIT 6. Pricing under different market structures. Perfect Competition
UNIT 6 ricing under different market structures erfect Competition Market Structure erfect Competition ure Monopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on the scale, the
More informationProblem Set 8 (Answers)
Intermediate Microeconomics Prof. David Bjerk Problem Set 8 (Answers) 1  Gil Bates runs an online help center. To produce his product, he needs an internet server and workers. In particular, each worker
More informationEconomics 100 Exam 2
Name: 1. During the long run: Economics 100 Exam 2 A. Output is limited because of the law of diminishing returns B. The scale of operations cannot be changed C. The firm must decide how to use the current
More informationProblems: Table 1: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2
Problems: Table 1: Labor Hours needed to make one Amount produced in 90 hours: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2 1. Refer to Table 1. For Carolyn, the opportunity cost of 1
More informationProduction Function in the LongRun. Business Economics Theory of the Firm II Production and Cost in the Long Run. Description of Technology
Business Economics Theory of the Firm II Production and Cost in the ong Run Two or more variable input factors Thomas & Maurice, Chapter 9 Herbert Stocker herbert.stocker@uibk.ac.at Institute of International
More informationThe Markets for the Factors of Production. Derived Demand. Our Example: Farmer Jack. Two Assumptions
8 The Markets for the Factors of roduction R I N C I E S O F ECONOMICS F O U R T H E D I T I O N N. G R E G O R Y M A N K I In this chapter, look for the answers to these questions: hat determines a competitive
More informationCHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition
CHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary This chapter deals with supply and demand for labor. You will learn about why the supply curve for
More informationA) In this situation, the production function exhibits both diminishing returns to labor and constant returns to scale. Explain why.
Problems for Unit 1, ECON 3357, Fall 2012, Darren Grant. Brief answers are provided below. The tutors await your visit to work on these problems, and I will discuss one or two in class before they are
More information