True or False:
1. By far the largest fraction of national income goes to wages and salaries for labor services.
2. The “price” of a productive factor is directly related to consumer demand for the final good or service.
3. In a competitive labor market, a firm’s marginal resource cost is the market wage.
4. Hiring an additional worker would lower profits when the marginal revenue product is greater than the marginal resource cost. 5. The law of diminishing marginal product states that as increasing quantities of a variable input (e.g., labor) are added to fixed quantities of another input, output will rise, but at some point it will increase by diminishing amounts.
6. The marginal revenue product of labor declines, even in the case of competitive output markets, because of the diminishing marginal product of labor.
7. A profit-maximizing firm will hire up to the last unit of input for which the wage is expected to exceed the marginal revenue product.
8. In a competitive labor market, a firm can hire all the labor it wishes at the prevailing wage.
9. Only at the equilibrium wage are both suppliers (workers) and demanders (employers) of labor able to exchange the quantity of labor they desire.
10. Decreases in the demand curve for labor may arise from decreases in labor productivity or from increases in the price of the good produced by that labor.