1. The marginal revenue product of labor equals _______ times______________.
2. A profit-maximizing firm will hire the number of workers where equals __________.
3. Your favorite professional team is considering hiring a new player for $3 million per year. It will be sensible (profitable) to hire the player if his __________is greater than the $3 million cost.
4. Arrows up or down: The logic of the output effect is that a decrease in the wage wills __________production costs, so the price of output will __________and the quantity of output demanded will __________. As a result, the quantity of labor demanded will__________.
5. The input-substitution effect is that a decrease in the wage __________ (increases/decreases) the quantity of labor per unit of __________, so the quantity of labor demanded __________ (increases/decreases).
6. The short-run market demand curve for labor is __________ (steeper/flatter) than the long-run demand because __________occur(s) in the short run.
7. Demands for News Kids. Consider the market for newspaper delivery kids in Kidsville. Each news kid receives a piece rate of $2 per subscriber per month and has a fixed territory that initially has 100 subscribers. The price elasticity of demand for subscriptions is 2.0. Suppose the new city council of Kidsville passes a law that establishes a minimum piece rate of $3 per subscriber per month. As a result, the publisher increases the monthly price of a subscription by 20 percent. How will the new law affect the monthly income of the typical news kid?
8. Demand for Airline Pilots. Comment on the following: There is no substitute for an airline pilot: Someone has to fly the plane. Therefore, an increase in the wage of airline pilots will not change the number of pilots used by the airlines.