Labour Market and Labour Demand Quiz
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Labour Market and Labour Demand Quiz

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@SublimeArlington

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Questions and Answers

What does the short-run labour demand curve for a firm tell us?

  • How capital affects the firm's employment
  • What happens to the firm's employment as the wage changes, holding capital constant (correct)
  • How labour mobility affects the firm's employment
  • How the compensating wage differential impacts the firm's employment

    • What does the value of marginal product represent in the context of labour demand?

  • The total cost incurred by the firm in hiring labor
  • The average wage paid by the firm to its employees
  • The total revenue earned by the firm from selling products
  • The additional revenue generated by hiring an additional unit of labor (correct)

    • In the context of labour economics, what would happen to a firm's revenue when hiring a second worker if the value of marginal product curve is upward sloping?

  • The second worker would have a lower marginal product than the first worker
  • The first worker would be laid off due to the second worker being more productive
  • The second worker would contribute even more to the firm's revenue than the first worker (correct)
  • The second worker would have no impact on the firm's revenue

    • How is the short-run labour demand curve related to changes in wages?

    <p>It decreases as wages increase</p> Signup and view all the answers

    When deriving the short-run labour demand curve, what element is held constant?

    <p>Capital</p> Signup and view all the answers

    What is the significance of having a downward-sloping portion in a firm's value of marginal product curve?

    <p>It shows that each additional worker contributes less to revenue</p> Signup and view all the answers

    Why does a firm's value of marginal product curve slope upward when hiring additional workers?

    <p>Due to diminishing returns to labor</p> Signup and view all the answers

    'Compensating Wage Differential' primarily aims to:

    <p>Offset differences in working conditions or job characteristics among jobs within an industry or region</p> Signup and view all the answers

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