The Figure Given Below Represents Equilibrium in the Labor Market

question 45

Multiple Choice

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor

-Which of the following statements is not true?

• A)Assuming a perfectly competitive labor market, a firm selling in a monopolistic product market will have a lower marginal revenue product curve than a firm in a perfectly competitive product market.
• B)The intersection of market-labor supply with market-labor demand establishes equilibrium in a perfectly competitive labor market.
• C)In monopsonistic labor markets, an individual firm faces a positively sloped labor-supply curve.
• D)In a perfectly competitive labor market, an individual firm can hire as many workers as it needs at the equilibrium wage rate
• E)In a monopsonistic labor market, marginal revenue product is equal to the value of marginal product.

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Definitions:

Equivalent Value

A concept referring to the equality of value between two entities, often used in economics and exchange theories.

Hard Bargaining

A negotiation strategy involving firm stands on demands and little willingness to compromise.

Reciprocity

A principle of mutual exchange in social relations where benefits or services are returned in kind.

Consuming Goods

The act of using up or buying products and services to fulfill human needs or desires.