Microecon 1

The graphical representation of the relationship between the wage rate and the quantity of labor firms are willing to hire in a market → Labor Demand Curve

The increase in the amount of output from an additional unit of labor → Marginal Product of Labor (MPL)

The graphical representation of the relationship between the wage rate and the quantity of labor workers are willing to provide in a market → Labor Supply Curve

The additional revenue the firm receives from selling the output produced from an additional unit of labor → Value of the Marginal Product of Labor (VMPL)

Which of the following events may decrease the value of the marginal product of labor? Check all that apply.

A decrease in the wage rate

A decrease in the output price

Bad weather that causes a decrease in supply and a rise in price for one of the inputs used to make the good

An increase in the marginal product of labor

The equilibrium wage rate is the wage at which the quantity of labor supplied equals the quantity of labor demanded in a competitive labor market. It is where the labor supply curve (workers willing to work at different wages) intersects with the labor demand curve (firms hiring workers at different wages).

The most important factors of production are d. labor, land, and capital.
If a factor exhibits diminishing marginal product, hiring additional units of the factor will generate ever smaller amounts of output.
The value of the marginal product of labor is the price of the output times the marginal product of labor.
For a competitive, profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm's demand curve for capital.
An increase in the supply of labor decreases the value of the marginal product of labor and decreases the wage.
A decrease in the demand for Uber rides decreases the value of the marginal product of Uber drivers, reduces their wage, and reduces employment in the ride-sharing industry.
What will an increase in the supply of fishermen do to the market for capital employed in the fishing industry? Increase the demand for fishing boats and increase rental rates on fishing boats.
An increase in the demand for coconuts will cause all but which of the following? A decrease in the number of coconut pickers employed.
An increase in the supply of farm tractors will cause all but which of the following? A decrease in the wage of farmworkers.
If both input and output markets are competitive and firms are profit maximizing, then in equilibrium, each factor of production earns the value of its marginal product.
An individual firm's demand for a factor of production slopes downward due to the factor's diminishing marginal product.
An increase in the demand for a firm's output increases the prosperity of both the firm and the factors hired by the firm.
A competitive, profit-maximizing firm should hire workers up to the point where the value of the marginal product of labor equals the wage.
Which of the following is not true with regard to workers who have a high value of marginal product? These workers usually have little capital with which to work.
An increase in the price of brick homes shifts the demand for brick layers to the right and increases the wage of brick layers.
When capital is owned by the firm as opposed to being directly owned by households, capital income may take any of the following forms except wages paid to households.
Suppose there is a pandemic that significantly reduces the population. What is likely to happen to equilibrium wages and rental rates of capital when compared to their values prior to the pandemic? Wages rise and rental rates fall.

Marginal Rate of Substitution (MRS) is a concept in economics that measures the rate at which a consumer is willing to trade one good for another while maintaining the same level of satisfaction or utility.

MRS=Change in quantity of Good 2/ Change in quantity of Good 1

The limit on the consumption bundles that a consumer can afford is known as the budget constraint
A change in the relative prices of which of the following pairs of goods would likely cause the smallest substitution effect? Right shoes and left shoes
Indifference curves for perfect substitutes are straight lines
The slope at any point on an indifference curve is known as the marginal rate of substitution
Which of the following statements is true with regard to the standard properties of indifference curves? Higher indifference curves are preferred to lower ones, Indifference curves do not cross each other, Indifference curves are downward sloping.
The consumer's optimal purchase of any two goods is the point where the consumer reaches the highest indifference curve subject to remaining on the budget constraint
Which of the following is true about the consumer's optimum consumption bundle? At the optimum, the indifference curve is tangent to the budget constraint, the slope of the indifference curve equals the slope of the budget constraint, the relative prices of the two goods equals the marginal rate of substitution
Suppose we measure the quantity of good X on the horizontal axis and the quantity of good Y on the vertical axis. If indifference curves are bowed inward toward the origin, as we move from having an abundance of good X to having an abundance of good Y, the marginal rate of substitution of good Y for good X (the slope of the indifference curve) rises
If an increase in a consumer's income causes the consumer to increase their quantity demanded of a good, then the good is a(n) normal good
If an increase in a consumer's income causes the consumer to decrease their quantity demanded of a good, then the good is a(n) inferior good
The change in consumption that results when a price change moves the consumer along a given indifference curve is known as the substitution effect
If income and prices were both to double, the budget constraint would stay the same
If leisure is a normal good, an increase in the wage will increase the amount of labor supplied if the substitution effect outweighs the income effect
If consumption when young and when old are both normal goods, an increase in the interest rate will increase the quantity of saving if the substitution effect outweighs the income effect
Which of the following is not true regarding the outcome of a consumer's optimization process? The consumer is indifferent between any two points on their budget constraint.

When are net benefits maximized? When marginal benefit equal marginal cost
The average total cost curve generally will take the shape where it first declines then increases
Microeconomics is the study of small scale allocation of scarce resources
During the latte production exercise, when there was only one barista, adding an additional "machine" had no effect on output
Regarding production, a manager will want to use the right level of inputs
Holding "machines" constant, what happened to marginal product of labor as we added more baristas? This is generally true also in observation. positive, but got smaller
A production function is a mathematical function describing how inputs like capital, labor, land, technology, entrepreneurship, finance, etc interact to produce what? Output
The city is proposing a tax of $1 per 12 pack of soda to be paid by the producer of the soda. Which of the following cost curves will not be impacted by the tax? Average fixed cost
Average total cost, initially declines, reaches a minumum and then begins to increase as output increases.
Which of the following statements about indifference curves is false? Indifference curves have a constant slope
Which of the following satisfies the utility maximization and cost minimization for consumer choice? when the marginal utility per dollar spent for one good is equal to the marginal utility per dollar spent of another good
Budget = Price Y*Quantity Y + Price X*Quantity X\
MC=Change in Quantity (Q)Change in Total Cost (TC)
Average Total Cost (ATC)=Quantity (Q)Total Cost (TC)
Total Cost=Explicit Costs+Implicit Costs
Total Cost=Average Cost×Quantity
Total Benefit=Marginal Benefit×Quantity
Net Benefit=Total Benefit−Total Cost
MC=Change in QuantityChange in Total Cost