45) What are the five most important variables that cause the market demand curve for laborto shift?45)Answer: The most important factors that cause the demand curve for labor to shift are: 1)changes in human capital, 2) changes in technology, 3) changes in the quantity ofother inputs, 4) changes in the price of the product, and (5) changes in the numberof firms in the market.Diff: 2Page Ref: 550/550Topic: The Demand for LaborLearning Outcome: Micro 17: Explain the effects of the factors of production, factor demand, andfactor supply and labor in factor marketsAACSB: Reflective Thinking13
46) A firmʹs labor demand curve is also its marginal revenue product curve. For both theperfectly competitive firm and the output price maker, the labor demand curve slopesdownwards. However, there is a difference in the reasons why the labor demand curveslopes downwards. What is this difference?46)Answer: A perfectly competitive firm can sell all its output at a constant price. This meansthat its marginal revenue product falls as additional units of labor are hired onlybecause of the law of diminishing returns. This law states that in the presence of afixed factor, ultimately each additional unit of labor will be less productive thanprevious units. A firm with market power has to lower its selling price to sell more,so its marginal revenue product falls as additional units of labor are hired becauseof diminishing returns and a falling marginal revenue.Diff: 2Page Ref: 547/547Topic: The Demand for LaborLearning Outcome: Micro 17: Explain the effects of the factors of production, factor demand, andfactor supply and labor in factor marketsAACSB: Analytic Skills14
Table 17-3Number ofMechanicsOilChangesper DayMarginalProductMarginalRevenueProduct1621231742152462647)Refer to Table 17-3.Oil Can Harryʹs, a new automobile service shop, is ready to start
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