SOLVED

21) A decrease in the price of factors of production that are substitutes for labour shifts the labour A) demand curve leftward. B) demand curve rightward. C) supply curve leftward. D) supply curve rightward. E) demand curve leftward and the labour supply curve leftward. 22) Mr. Smith’s firm competes in a perfectly competitive market. The firm is currently hiring 30 workers. The value of marginal product of the last worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profit, Mr. Smith A) continues hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired. B) increases the price of the firm’s product so that the value of marginal product of the last worker hired increases to $8.00 per hour. C) decreases the price of the firm’s product so that the value of marginal product of the last worker hired increases to $8.00 per hour. D) decreases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00. E) increases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00. 23) Suppose a profit-maximizing firm hires labour in a competitive labour market. If the value of marginal product of labour of the last worker hired is less than the wage rate, the firm A) increases the wage rate. B) decreases the wage rate. C) increases the quantity of labour it hires. D) decreases the quantity of labour it hires. E) shuts down. 24) A decrease in the price of a firm’s output A) decreases the supply of labour. B) increases the supply of labour. C) increases the value of marginal product of labour. D) decreases the quantity of labour demanded. E) decreases the value of marginal product of labour. Use the table below to answer the following questions. Table 17.2.2 Wendy owns an apple orchard and she employs studentsto pick the apples. In an hour they can pick the following amounts: 25) Refer to Table 17.2.2. If the price of apples is $0.50 per kilogram, the value of marginal product of the 5th student is A) $0.50 an hour. B) $72.50 an hour. C) $14.50 an hour. D) $12.50 an hour. E) $10 an hour. Â Â