Pickleco, a pickle-producing firm, hires labor and capital in perfectly competitive factor markets. The firm is minimizing its costs at the current production level. The marginal product of labor is 100 units and the marginal product of capital is 60 units. If the rental price of capital is $12, what is the wage Pickleco is paying its workers?

A firm with market power engages in price discrimination to

The figure presents a graph. The horizontal axis is labeled Quantity. The vertical axis is labeled Price, Cost, M R, and A T C. There is a straight line labeled D that begins near the top of the vertical axis and moves down and to the right, ending on the far right side of the horizontal axis. There are two curves labeled M C and A T C. The curve A T C begins just to the right and about half way up the vertical axis. It moves down and to the right, and reaches a minimum point to the left of the D line. It then begins to move up and to the right, crossing the D line. It ends on the right side on the graph at about the same height as which it began. The curve M C begins on the vertical axis, just above the origin and well below the A T C curve, and moves up and to the right, crossing the A T C curve at the minimum point of the A T C curve. It then continues up, crossing the D line, and ends in the upper right hand portion of the graph. Various quantities are identified on the horizontal axis. There is a vertical dashed line that goes from the intersection of the A T C and M C curves to the horizontal axis, and identifies the quantity Q sub 2 on the horizontal axis. The quantity Q sub 1 is identified just to the left of Q sub 2 on the horizontal axis. There is a straight line, labeled M R, that begins at the same point on the vertical axis as the D line, and moves down and to the right, ending at Q sub 1 on the horizontal axis. There is a second vertical dashed line that goes from the intersection of the M R and M C curves to the horizontal axis, and identifies the quantity Q sub 0 on the horizontal axis, which is just to the left of Q sub 1. There is a third vertical dashed line that goes from the intersection of the M C and D curves down to the horizontal axis, and identifies the quantity Q sub 3, which is just to the right of Q sub 2. There is a fourth vertical dashed line that goes from the intersection of the A T C and D curves down to the horizontal axis, and identifies the quantity Q sub 4, which is just to the right of Q sub 3 Based on the information in the graph above, what are the profit-maximizing output quantities for a single-price monopolist and for a monopolist that engages in perfect price discrimination?

If a firm engages in perfect price discrimination, it charges

Which of the following tends to increase the gap in earnings between skilled and unskilled workers over time?

The figure shoes a graph for a monopsonistic labor market with a horizontal axis labeled Number of Workers and a vertical axis labeled Wage. Two quantities appear on the horizontal axis and are labeled, from left to right, L sub one and L sub 2. Four prices appear on the vertical axis and are labeled, from bottom to top, W sub one, W sub 2, W sub 3, and W sub 4. There are two upward sloping lines and one downward sloping line on the graph. The leftmost upward sloping line is labeled Marginal Factor Cost, and begins to the right of the vertical axis and below a wage of W sub one, moves up and to the right, intersects the downward sloping line at L sub one and W sub 3, continues on, passing through the coordinates for L sub 2 and W sub 4. The rightmost upward sloping line is labeled Supply, and begins slightly below the start of the Marginal Factor Cost line, moves up and to the right, increasing in distance from the Marginal Factor Cost line as it moves up, and intersects the downward sloping line at L sub 2 and W sub 2, continues on, and ends to the right of and below the Marginal Factor Cost line. The downward sloping line is labeled Marginal Revenue Product, and begins to the right of the vertical axis and above wage W sub 4, moves down and to the right, intersects the marginal Factor Cost line at L sub one and W sub 3, then intersects the Supply line at L sub 2 and W sub 2, and continues on. The upward and downward sloping lines do not cross the horizontal or vertical axis. In the monopsonistic labor market shown in the diagram above, which of the following indicates the number of workers the firm will hire and the wage rate it will pay?

A firm with market power sells its product in two markets. The firm faces the same cost curves in both markets but faces a relatively elastic demand in one market for its product and a relatively inelastic demand in the other market for that same product. Which of the following will increase the firm’s profits?

The following questions are based on the table below, which shows a firm’s average variable cost and average total cost. Table: A Firm’s Output, Average Variable Cost, and Average Total Cost Output Average Variable Cost Average Total Cost 1 $40 $160 2 35 95 3 40 80 4 45 75 5 50 74 6 55 75 In the short run, the lowest price at which the firm will continue to produce is

The following problem refers to the graph below for a representative firm in a perfectly competitive, constant-cost industry, which shows the firm’s marginal cost (MC), average total cost (ATC), and average variable cost (AVC). The figure shows a graph with the cost curves for a perfectly competitive firm. The horizontal axis of the graph is labeled Quantity, and the vertical axis of the graph is labeled Costs. The intersection of the horizontal and vertical axis is labeled zero. Three quantities appear on the horizontal axis and are labeled, from left to right, Q sub 1, Q sub 2, and Q sub 3. Four prices appear on the vertical axis, and are labeled from bottom to top, P sub 1, P sub 2, P sub 3, and P sub 4. In the graph there are three cost curves labeled, Marginal Cost, Average Total Cost, and Average Variable Cost. The Marginal Cost curve intersects with each of the other curves and the Average Total Cost curve is always above the Average Variable Cost curve. Starting from the lower left of the graph, the Marginal Cost curve begins at a coordinate to the left of Q sub 1, and slightly above P sub 2. It curves steeply down and reaches a minimum at the coordinate Q sub 1 and P sub 1, then it curves away from the horizontal axis and moves up and to the right. When the Marginal Cost curve moves up and to the right, it intersects the other two cost curves at their minimum points; this line first intersects the Average Variable Cost curve at the coordinates Q sub 2 and P sub 2, and then it intersects the Average Total Cost curve at the coordinates Q sub 3 and P sub 3, and continues on through coordinates P sub 4. Starting above and to the right of the starting point of the Marginal Cost curve on the graph, the Average Variable Cost curve begins at a point with a coordinate of Q sub 1, and slightly above P sub 3. The curve moves gently down and to the right to the minimum point of the curve at coordinates Q sub 2 and P sub 2, which is also the point of intersection with the Marginal cost curve. The Average Variable Cost graph curves away from the horizontal axis and moves up to the right ending to the right of Q sub 3, and slightly below P sub 4. Starting near the top of the graph, above the starting point of the Average Variable Cost curve on the graph, the Average Total Cost curve begins at the coordinate for Q sub 1 on the Quantity axis. The curve moves gently down and to the right to a minimum point of the curve at the coordinate Q sub 3 and P sub 3, which is also the point of intersection with the Marginal cost curve. The Average Total Cost graph curves away from the horizontal axis and moves gently up to the right moving past Q sub 3 and P sub 4. Which of the following MUST be true in the long run?

The allocatively efficient level of output is produced in any market structure when