Problem 1
Brenda owns a construction company that employs bricklayers and other skilled tradesmen. Her firm's MRP for bricklayers is 22.25 dollars per hour for each of the first seven bricklayers, 18.50 dollars for an eighth bricklayer, and 17.75 dollars for a ninth bricklayer. Given that she is a price taker when hiring bricklayers, how many bricklayers will she hire if the market equilibrium wage for bricklayers is 18.00 dollars per hour? a. Zero. b. Seven. c. Eight. d. Nine. e. More information is required to answer this question.
Problem 2
Because a perfectly competitive employer's MRC curve is ______, it will hire ______, workers than would a monoposony employer with the same MRP curve, a. Upsloping; more. b. Upsloping; fewer. c. Flat; more. d. Flat; fewer. e. Downsloping; more. f. Downsloping; fewer.
Problem 3
True or false. When a labor market consists of a single monopsony buyer of labor interacting with a single monopoly seller of labor (such as a trade union), the resulting quantity of labor that is hired will always be inefficiently low.
Problem 4
The market equilibrium wage is currently 12 dollars per hour among hairdressers. At that wage, 17,323 hairdressers are currently employed in the state. The state legislature then sets a minimum wage of 11.50 dollars per hour for hairdressers. If there are no changes to either the demand or supply for hairdressers when that minimum wage is imposed, the number of hairdressers employed in the state will be: a. Fewer than 17,323 b. Still 17,323 c. More than 17,323 d. This is a bilateral monopsony so you can't tell.
Problem 5
On average, 50 -year-old workers are paid several times more than workers in their teens and twenties. Which of the following options is the most likely explanation for that huge difference in average earnings? a. Older workers have more human capital and higher MRPs. b. Employers engage in widespread discrimination against younger workers. c. Young people lack information about the existence of the high-paying jobs occupied by older workers. d. Older workers receive compensating differences because they do jobs that are more risky than the jobs done by younger workers.
Problem 6
Manny owns a local fast-food franchise. Angel runs it for him. So in this situation, Manny is the _______ and Angel is the ______. a. Free rider; entrepreneur. b. Agent; principal. c. Principal; agent. d. Producer; consumer.
Problem 7
A principal is worried that her agent may not do what she wants. As a solution, she should consider: a. Commissions. b. Bonuses. c. Profit sharing. d. All of the above.
