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Micro Unit 5 Study Guide

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Cалават Рысаков
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14 views2 pages

Micro Unit 5 Study Guide

Uploaded by

Cалават Рысаков
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BIG PICTURE IDEAS


#1. A .. market is where businesses purchase the resources they need to produce goods or services.
This is also called an input market or .. market.
#2. The idea that the demand for resources is determined by the products they produce is called .. demand.
#3. In a perfectly competitive labor market, workers have identical skills and are wage .. .
#4. Firms maximize profit by hiring workers when the marginal .. product equals the marginal
.. cost .
#5. A market controlled by only one buyer is called a .. .

Topic 5.1- Introduction to Factor Markets


1. Explain the difference between the factor market and the product market.

2. The four factors of production are .. , .. , capital, entrepreneurship.


3. The four factor payments .. , wages, .. , and profit.
4. Why is the demand for labor downward-sloping? 5. Why is the supply for labor upward-sloping?

Topic 5.2- Changes in Factor Demand and Supply


Pizza Cooks 6. Draw the supply and demand for cooks and show a binding minimum wage. Label the
equilibrium wage (W1) and quantity (Q1) and the minimum wage (WM) and quantity (QM).
7. A binding minimum wage can cause .. since
businesses often hire fewer workers.
8. Identify the shifters of labor demand. 9. Identify the shifters of labor supply.

10. For each scenario, identify the initial change (↑, ↓, or no change) in demand or supply, price, and quantity of pizza cooks
Scenario Demand Supply Wage Quantity
The government requires pizza cooks to pass an exam to get certified to make pizza.
The price of burgers increases, causing the price of pizza to increase.
Technological advancements lower the price of robots that can make pizza.
The government establishes a binding minimum wage that affects pizza cooks.
Instagram influencers encourage teenagers to get jobs at pizza restaurants.
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Topic 5.3- Profit-Maximizing Behavior in Perfectly Competitive Factor Markets


11. Workers in perfectly competitive labor markets work for the same .. which is set by the .. .
12. Define marginal revenue product (MRP). 14. Assume perfectly competitive product and labor
markets. If the price of the product is $5 and the
wage is $20, how many workers should be hired?

15. How much is the profit or loss?


13. Define marginal resources cost (MRC).
16. Assume this firm develops a process that makes only
their workers more productive. What will happen to
the wage and quantity of workers hired?

17. Draw a perfectly competitive labor market and firm. Label the wage W1 the quantity in the market QM and the quantity for the firm QF.
Market Firm 18. The .. of labor for firms
in perfect competition is perfectly elastic.
19. If the government sets a binding minimum
wage, will the MRP of the last worker hired
increase, decrease, or stay the same?
Explain.

Topic 5.3- Profit-Maximizing (continued) Topic 5.4- Monopsonistic Markets


20. What is the least cost rule when combining resources? 23. Draw a monopsony and label the wage and quantity.

Label the
wage W1
Assume a firm hires the cost-minimizing combination of labor and
capital. The marginal product of the last worker is 60 units and the Label the
marginal product of the last unit of capital is 20 units. quantity Q1
21. If the wage rate is $30 per hour, what is the price of capital?

22. If the wage falls to $10 per hour, the company should hire
.. workers and .. capital.

Unit Review
True or False
24. If the demand for houses increases, the wage of carpenters will increase and the quantity will decrease.
25. Assume bricks and wood are substitute resources. If the price of bricks increases, the price of wood will increase.
26. A binding minimum wage leads to relatively less unemployment when the demand for labor is inelastic.
27. A monopsony hires less workers and pays lower wages than a competitive labor market.
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