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This is a chance to earn more points (up to 20)

Economics

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• Labor Markets Problem Set

  Labor Markets Problem Set^[1]

   

  1. The table below shows data for the production of Avocados for an individual firm.

  Number of workers	Number of Avocados
  0	0
  1	70
  2	126
  3	168
  4	196
  5	210

   

  Given this data, what is the marginal product of labor when quantity increases from 1 by one unit?

   

   

   

  2. The table below shows data for the production of Avocados for an individual firm operating in a perfectly competitive market. Suppose that the price of Avocados is $3.

  Number of workers	Number of Avocados
  0	0
  10	150
  20	270
  30	360
  40	420
  50	450

   

   

   

   

   

   

  Given this data, complete the table:

  Number of Workers	Marginal Product of Labor (MPL)	Value of the Marginal Product of Labor (VMPL)
  0	-	-
  10
  20
  30
  40
  50

   

   

  3. The table below shows data for the production of Avocados for an individual firm operating in an imperfectly competitive market.

  Number of workers	Number of Avocados	Marginal Revenue
  0	0	22
  10	150	21
  20	270	20
  30	360	19
  40	420	18
  50	450	17

   

   

  Given this data, complete the table:

  Number of Workers	Marginal Product of Labor (MPL)	Marginal Revenue Product of Labor (MRPL)
  0	-	-
  10
  20
  30
  40
  50

   

   

   

   

  4. Suppose that the employer is hiring workers in a perfectly competitive market where the market equilibrium wage is $8.

   

  

   

  How many workers will be hired at this wage?

   

   

   

  5. Suppose that a firm has market power in their output market. Suppose that the employer is hiring workers in a perfectly competitive market where the market equilibrium wage is $15.

  The graph below shows the labor demand curve for this firm.

  Note: VMPL stands for Value of the Marginal Product of Labor. MRPL stands for Marginal Revenue Product of Labor.

   

  

   

  What is the number of workers that this firm will hire?

• 18.33
• 6.17
• 9.17
•  

   

  6. Suppose that a firm has market power in their output market. Suppose that a firm has market power in their output market. Suppose that the employer is hiring workers in a perfectly competitive market where the market equilibrium wage is $15.

  The graph below shows the labor demand curve for this firm.

  Note: VMPL stands for Value of the Marginal Product of Labor. MRPL stands for Marginal Revenue Product of Labor.

   

  

   

  What is the number of workers that would be hired if this firm would be selling it's output in a perfectly competitive market?

• 18.33
• 6.17
• 9.17

•  

   

  7. The graph below shows the supply and demand curves for labor in a perfectly competitive market.

   

  

   

  What is the equilibrium quantity of workers hired in this market?

   

   

  8. The graph below shows the supply and demand curves for labor in a perfectly competitive market.

   

  

   

   

  What is the equilibrium wage that will prevail in this market?

   

   

   

  Use the following information to answer questions 9 through 12:

   

  The graph below shows supply and demand for labor in a monopsonistic labor market.

   

  

   

  9. What is the number of workers that this firm will hire?

• 2.67 thousand
• 4 thousand
• 6 thousand
• 1.67 thousand

•  

  10. What is the wage that this firm will pay their workers?

• 2.67 thousand
• 4 thousand
• 6 thousand
• 4.67 thousand

•  

  11. What is the number of workers that would be hired if this were a perfectly competitive labor market?

• 2.67 thousand
• 4 thousand
• 6 thousand
• 4.67 thousand

•  

  12. What is the wage that would be paid if this were a perfectly competitive labor market?

• $2.67
• $4
• $6
• $4.67

•  

   

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  ^[1] This assignment by Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License. You can access an alternative means to plotting points at https://www.desmos.com/calculator.