Factor Markets
In a perfectly competitive labor market, if the supply of labor increases, what will happen to the equilibrium wage and the quantity of labor hired?
The equilibrium wage will decrease, and the quantity of labor hired will decrease
The equilibrium wage will decrease, and the quantity of labor hired will increase
The equilibrium wage will increase, and the quantity of labor hired will increase
The equilibrium wage will increase, and the quantity of labor hired will decrease
The profit-maximizing rule for combining resources in a perfectly competitive labor market states that firms should hire resources where?
MRP = MRC for each resource
MRP is equal to the wage set by the government
MRP < MRC for each resource
MRP > MRC for each resource
What would likely happen if there were an increase in demand for a product produced in a perfectly competitive labor market?
The demand for labor would increase, raising wages.
Employers would decrease wages due to reduced costs.
Wages would remain unchanged as demand for products do not affect wage rates.
The supply of labor would become perfectly inelastic.
In a perfectly competitive labor market, how does an increase in compulsory education requirements affect the supply curve for unskilled labor?
The supply curve becomes more elastic as more individuals have access to basic job qualifications through increased education standards.
The supply curve remains unchanged since compulsory education impacts skilled labor markets rather than unskilled ones.
The supply curve shifts leftward as fewer workers qualify as "unskilled" due to higher education levels required for entry-level positions.
The supply curve shifts rightward because compulsory education increases overall workforce skills pushing more workers into unskilled categories due to relative comparison.
When a payroll tax is levied on employers in a perfectly competitive labor market, how does it generally affect labor supply?
Supply increases as workers require higher gross wages to compensate for their perceived share of taxes paid by employers.
Supply decreases immediately but may shift back if net wages are adjusted upwards over time through collective bargaining or legislation reforming tax policy.
The supply of labor does not shift; instead, there is movement along the supply curve due to lower net wages received by employees.
Thereโs an outward shift in supply as more individuals enter the workforce seeking employment despite lower take-home pay due to fixed costs of living expenses they need to cover.
In a perfectly competitive labor market, what would be the effect of an increase in the demand for labor without any change in supply?
The equilibrium wage remains unchanged while the employment level increases.
The equilibrium wage and employment level would increase.
The equilibrium wage would decrease while employment level remains unchanged.
Both the equilibrium wage and employment level would decrease.
What outcome can be expected if there is an unexpected technological breakthrough that improves productivity within a perfectly competitive labor market?
The wage rate increases as firms compete for more workers.
The wage rate fluctuates unpredictably because of external market factors.
The wage rate remains unchanged as worker productivity stays constant.
The wage rate decreases as firms benefit from increased productivity.

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How does an individual worker's decision on how much to work respond to higher wages in a perfectly competitive labor market?
An individual worker's decision on how much to work does not change due to fixed contracts
An individual worker starts his or her own competing business instead of working more hours or seeking more jobs
An individual worker tends to work fewer hours or seek fewer jobs
An individual worker tends to work more hours or seek more jobs
What does a profit-maximizing firm in a perfectly competitive labor market consider when deciding how many workers to hire?
Solely government-imposed employment quotas.
The marginal product of labor compared to wage rate.
Only the educational background of potential employees.
Just the age distribution within their current workforce.
In the firm graph of a perfectly competitive labor market, the supply of labor is represented by?
SL (supply of labor)
MRC (marginal resource cost)
MRP (marginal revenue product)
DL (demand for labor)