Question

If apple pickers and pear pickers employ the same skills, then the labor supply in the apple-picking market will likely rise when workers in the pear-picking market get a raise in wage.

true or false

In the short run, as a firm hires more laborers, the value of marginal product of labor decreases because of diminishing marginal product.

true or false

A medical doctor who earns $110 per hour and plays golf during her leisure time has a higher opportunity cost of leisure than an attorney who earns $120 per hour and who sleeps during his leisure time.

true or false

Answer 1

Ans) 1) False. When workers in pear picking farm are getting raise in wages, supply will increase in pear picking farm and will decrease in apple picking farm. As everyone wants to earn more money!

2) True. As more and more workers are employed, the increase in output decreases due to diminishing marginal product and hence VMPL also decreases. (VMPL = Value of marginal product of labour = marginal product × price)

3) False. Opportunity cost for attorney is higher as his salary is more. More the salary, more the opportunity cost.

(Opportunity cost = sacrife ÷ gain)