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# Quiz5 - Name PSU ID(last 4 Section Labor Market Quiz Econ 4...

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Name __________ PSU ID (last 4) ____ Section ______ Labor Market Quiz – Econ 4: DO NOT TURN THIS QUIZ SHEET OVER UNTIL INSTRUCTED TO DO SO – GOOD LUCK! Labor Market Quiz

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Use the following table to help you answer the questions that follow. TABLE 1 L Q MP L MRP Marginal Profit Total Profit 0 0 - - - 0 1 9 2 19 3 26 4 33 5 39 6 43 Answer A for True and B for False The current wage is \$ 100 and the price of output (Q) = \$20 1. The profit maximizing level of labor input for this firm is 4 workers. 2. If the marginal product of labor goes up by two for each worker, then to maximize profits, this firm will hire all six workers. 3. Given the initial conditions, to maximize profits, this firm will produce 39 units of output. 4. Suppose the wage you must pay rises to \$130. In order to maximize profits you should layoff (fire) two workers. 5. Given the initial conditions, the maximum profit is \$280. 6. Given the initial conditions, if the price that your receive for your product rises to \$22, then you, in order to (re-) maximize profits, you should hire one more person. 7. Higher productivity, all else constant shifts the supply curve to the right and higher wages, all else constant, shifts the supply curve to the left. 8. The profit maximizing condition for any firm is to keep hiring workers as long as the marginal product of labor is rising. 9. According to our discussion on the supply curve, anything development that lowers the cost of production will shift the supply curve to the right. If this occurs we say that the firm is willing to supply more (a higher quantity) at each and every price.
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