AP Microeconomics Unit 5

In the monopsonistic labor market shown in the diagram, which of the following indicates the number of workers the firm will hire and the wage rate it will pay, respectively?

• L1, W1

• L1, W3

• L2, W2

• L1, W2

What is the marginal factor cost of the fifth worker?

• $70

• $10

• $250

• $90

• $50

Which of the following can we predict about this market?

• The marginal factor cost of labor is less than the supply of labor.

• More nurses will be hired than in a competitive labor market.

• The quantity of labor hired will be allocatively efficient.

• Nurses are paid less than they would be paid in a competitive labor market.

• The hospital system will hire the quantity of labor where the supply of labor equals the marginal revenue product of labor.

The market supply of college instructors is given here. What is the marginal factor cost of the second instructor?

• $90,000

• $70,000

• $50,000

• $10,000

• $120,000

What wage and quantity combination will this firm choose to maximize profits?

• 600 workers, $70 per day

• 600 workers, $35 per day

• 400 workers, $25 per day

• 400 workers, $35 per day

• 400 workers, $55 per day

What combination of wage and quantity of labor will Hogwarts choose to maximize profits?

• Q₁ , w_a

• Q₂ , w_d

• Q₁ , w_c

• Q₂ , w_b

• Q₂ , w_c

Oreo cookies are now extremely expensive to purchase. Instead of buying Oreo cookies, I now want to buy Chips Ahoy. What determinant of demand does this likely fall under?

• Change in Price of Complementary Good

• Change in Price of Substitute Good

• Change in Consumer Price Expectations

• Change in Number of Consumers in the Market

The sellers of Twinkies also sell healthy foods. With all the health regulations we have now, the sellers of Twinkies want to sell more healthy foods. The supply of Twinkies will decrease. What supply factor does this best relate to?

• Change in Technology

• Change in Number of Sellers in the Market

• Change in Profit Opportunities Producing other Products

What happens if a minimum wage is imposed in a monopsony labor market?

• The marginal factor cost becomes horizontal at the minimum wage until it hits the labor supply curve.

• The marginal factor cost curve is less than the labor supply curve.

• The demand for labor becomes vertical.

• The labor supply curve becomes vertical at the amount of labor hired in a competitive market.

• The demand for labor becomes horizontal.

The graph above shows the marginal revenue product curve and supply curve of labor for a firm. The introduction of new management techniques dramatically increases workers productivity. Which of the following changes is most likely to occur?

• The supply curve will shift to the left, increasing the wage rate.

• The supply curve will shift to the right, increasing employment.

• The marginal revenue product curve will shift to the right, increasing wage rate.

• The marginal revenue product curve will shift to the left, reducing employment.

• Neither the marginal revenue product curve nor the supply curve will shift, but the wage will increase and employment will fall.