"econQuiz 3 0101

"econQuiz 3 0101 - e 8 4 The deadweight loss in...

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Quiz Econ 415 0101 Fine Textiles confronts perfect competition in its product market. The market price for its cloth is $13.00/yard. The firm uses two inputs, Capital (which is fixed) and Labor. Fine Textiles is the only employer of labor in its rural location, a small town in Alabama. In this market: 1) Fine Textiles maximizes profit hiring _______ workers. a) 120 b) 130 c) 140 d) 150 e) 160 2) Fine Textiles will offer a wage equal to ______ dollars per day. a) 35 b) 40 c) 45 d) 50 e) 60 3) The marginal product of the last worker hired equals ______ yards per day. a) 4 b) 5 c) 6 d) 7
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Unformatted text preview: e) 8 4) The deadweight loss in efficiency brought about by Fine Textiles’ monopsony power in this market equals _______ dollars. a) 300 b) 600 c) 900 d) 1200 e) 1500 5) Suppose workers in this market form a union, and demand a wage equal to $50/day. If Fine Textiles agrees to this wage demand we would expect employment of labor to _______ to _______ workers. a) decrease; 150 b) increase; 180 c) increase; 150 d) decrease; 90 Labor 200 150 100 Wage ($/Day) 100 75 50 25 50 VMP S MLC 35 65...
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