19. According to the table above, if the product price is $5 and the wage rate is $10 per hour, how many workers should this firm hire?
a. 3
b. 5
c. 4
d. 1
e. 2
Number of Units of the Resource Resource Price Marginal Revenue Product of the Resource
0 $2
1 4 $14
2 6 12
3 8 10
4 10 8
5 12 6
20. According to the table above, what wage rate will a monopsony pay to hire the optimal number of workers?
a) $4
b) $6
c) $8
d) $10
e) Between $6 and $8.
10. Assume that labor demand is given by Qd = 200 - 20P and labor Supply is given by Qs = 10P - 10, where P = wage and Q = quantity of labor. If a minimum wage of $8 is imposed on this market, what will be the impact on consumer and producer surplus in this labor market?
a. There will be no change in consumer and producer surplus in the labor market due to the minimum wage.
b. There will be a welfare gain of $40.
c. Both consumers and producers of labor will benefit from the minimum wage but we don't have enough information to determine the amount
d. There will be a welfare loss of $30.
e. Jobs will be lost but the gain in income to those keeping their jobs will outweigh the lost wages to those who are no longer employed..
24. The figure above shows the costs and revenue curves for a natural monopoly. Which of the following statements is true?
a. The unregulated monopolist will produce Q2 and charge P3 earning positive economic profit.
b. If the regulatory authority forces a price of P4, the monopolist will produce Q3 and earn zero economic profit.
c. This monopolist can achieve technological efficiency and still earn zero economic profit.
d. If the regulatory authority forces marginal cost pricing, the monopolist will earn negative economic profit.
e. None of the above is true.