1.The marginal revenue product of labor equals
times
.
2. A profit-maximizing firm will hire the number of workers where
equals
.
3. Your favorite professional team is considering hiring a new player for $3 million per year. It will be sensible (profitable) to hire the player if his
is greater than the $3 million cost.
4. Arrows up or down: The logic of the output effect is that a decrease in the wage willproduction costs, so the price of output will
and the quantity of output demanded will
. As a result, the quantity of labor demanded will
.
5. The input-substitution effect is that a decrease in the wage
(increases/decreases) the quantity of labor per unit of
, so the quantity of labor demanded
(increases/decreases).
6. The short-run market demand curve for labor is
(steeper/flatter) than the long-run demand because
occur(s) in the short run.
7. Fill the blanks with 75, 100, 117, 200, or 360. In major league baseball, the marginal revenue product of the typical free agent is roughly
percent of his salary, compared to
percent for a journeyman and
percent for an apprentice. (Related to Application 1 on page 707.)