Question

Wages are determined by the interaction of supply and demand in:

A) resource markets.

B) product markets.

C) the government sector.

D) the foreign sector.

The wage rate that an individual firm is willing to pay for a unit of labor is based on:

A) the cost of competing products.

B) the wage rates paid in other industries.

C) the dollar value of the labor's productivity to the firm.

D) the income earned by the top management of the firm.

The value of labor falls as additional units of labor are hired because of:

A) declining profits and increasing costs.

B) decreasing marginal productivity and increasing costs.

C) declining profits and the need to lower product price to sell additional units.

D) decreasing marginal productivity and, in most cases, the need to lower product price to sell additional units.

The value of labor is determined by the:

A) Law of Diminishing Returns and the Law of Supply.

B) Law of Diminishing Returns and the Law of Demand.

C) Law of Diminishing Marginal Utility and the Law of Supply.

D) Law of Diminishing Marginal Utility and the Law of Demand.

Answer 1

a) The wages are determined in the resource market where the household supply its labor. the answer is "A".

b) The wage rate that the firm is ready to pay is the productivity that the firm will get from the labor, the answer is "the dollar value of the labor's productivity to the firm." "C".

c) "D"

As more and more labors are hired the marginal productivity of the labor will decrease and hence the labor value.

d) "A"

the value of the labor is determined by the law of diminishing return and law of supply.