Question

1. In the perfectly competitive labor market, how is the wage rate set?

2. If the monopsony firm is a single-wage firm, then to hire more workers, the firm _____.

a. must reduce wages

b. must pay the new workers more

c. must raise the wages of all workers

d. will not change any wage

3. The local tennis stadium has a fixed number of seats for spectators. The equilibrium price to attend games for the Men's Championship is $15 and for Women's Championship is $25. Which of the following is true?

a. Women's games must be more expensive to stage than men's games.

b. The demand to attend women's games must be greater than that to attend men's games.

c. The supply of men's games must be less elastic than the supply of women's games.

d. The demand to attend women's games must be less than that to attend men's games.

4. Oligopolies face constraints like other markets; however, the one difference is that oligopolies face _____. a. a vertical demand curve b. a horizontal demand curve c. a positively sloped demand curve d. reactions of rival firms 9. Two or more oligopoly firms that act jointly is called a _____.

a. joint oligopoly

b. concentration

c. cartel

d. collision

5. Compared to a perfectly competitive industry with similar costs and demand, the single-price monopoly will produce _______ and its deadweight loss will be _______.

a. more; greater

b. more; less

c. less; greater

d. less; less

Answer 1

Q1

Answer
The perfectly competitive firm set wages where the marginal revenue product of labor is equal to the wage means the wage is equal to the value of the marginal product.

the hiring rule for the perfectly competitive firm is
MRP=wage
the MRP=marginal product *price
Ex.
Perfectly competitive firm's marginal product is 6 units and the wage is $24 but the price is $10 then the firm is not making profit-maximizing production because the wage is not equal to MRP
MRP=10*6=$60
and the wage is $24
so the firm should hire more workers to maximize profit.