iVAT Chapter 17 Part 2

A  is greater than MFC.

B  is less than MFC.

C  is above MFC.

D  equals MFC.

A  more workers than a firm operating in a perfectly competitive labor market.

B  an indeterminate number of workers.

C  the same number of workers as a firm operating in a perfectly competitive labor market.

D  fewer workers than a firm operating in a perfectly competitive labor market.

A  is less than that in a perfectly competitive labor market.

B  is greater than that in a perfectly competitive labor market.

C  may be greater than, less than, or equal to that in a perfectly competitive labor market, depending on labor supply.

D  is the same as that in a perfectly competitive labor market.

A  s the labor supply curve. This is due to the fact that the monopsonist is the labor market.

B  lies above the labor supply curve. This is because a monopsonist will not only have to increase wages to hire the marginal, or last worker hired, but all workers employed.

C  lies below the labor supply curve. This is because a monopsonist will not only have to increase wages to hire the marginal, or last worker hired, but all workers employed.

D  is unrelated to the labor supply curve. This is due to the fact that the firm is the sole employer in this market.

A  because the firm is a price setter and has an impact on the prevailing wage. Therefore, the firm can hire any number of workers, which will impact the prevailing wage. Thus, the wage does not equal MFC.

B  because the firm is a price setter and has impact on the prevailing wage. Therefore, the firm can hire any number of workers, which will impact the prevailing wage. Thus, the wage does not equal MFC.

C  because the firm is a price taker and has no impact on the prevailing wage. Therefore, the firm can hire any number of workers without impacting the prevailing wage.  Thus, the wage equals MFC.

D  because wages will have to increase if the firm wants to hire addtional workers.

A  is perfectly elastic and horizontal.

B  is perfectly inelstic and vertical.

C  is perfectly elastic and downward sloping.

D  is perfectly elastic and upward sloping.

A  P=MFC.

B  MRP>MFC.

C  MFC=MRP.

D  profits are increasing.

A  predicts that employment will increase.

B  predicts that unemployment will ensue.

C  predicts that wages will decrease.

D  predicts that GDP growth will increase.

A  Yes, due to the fact MFC=MRP. Therefore profits can be increased by hiring additional workers.

B  Yes, due to the fact MRP>MFC. Therefore, a firm can maximize profits by hiring additional workers.

C  No, the firm should hire exactly 8 workers because at that point MRP=MFC; which is the profit maximizing level of labor hired.

D  No, the firm should hire exactly 8 workers because at that point MRP>MFC; which is the profit maximizing level of labor hired.

A  No, due to the fact that MRP>MFC. The firm should hire up to the point where MRP=MFC.

B  Yes, because they will increase profits by firing workers.

C  Yes, due to the fact that MRP=MFC. The firm should hire up to the point where MRP=MFC.

D  Yes, due to the fact that MRP