Consider the Demand for Labor in the Computer Chip Industry

question 1

Multiple Choice

Consider the demand for labor in the computer chip industry. The demand for labor

• A) is derived from the demand for computer chips.
• B) is shown by a perfectly elastic demand for labor.
• C) is shown by a perfectly inelastic demand for labor.
• D) has a demand curve that is backward bending.

---

Definitions:

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-takers.

Marginal Revenue Product

The extra revenue generated from employing one additional unit of a resource.

Marginal Cost

The additional cost incurred by producing one more unit of a product, which can vary depending on the level of production.

Pareto Efficient

A distribution of resources where improving the situation of one person cannot be achieved without detriment to another.