PROGRESS 5

1

2

3

4

5

$40

$50

$65

$260

$300

1. The price of the product produced by the factor input

1. The average product of the factor input

1. The price of the factor input

The demand for the product the factor produces

1. The marginal product of the factor input

• The quantity demanded for restaurant meals depends on the price of the meal.

• The demand for books depends on the number of authors in the market.

• The demand for airline pilots depends on the demand for air travel.

• The demand for auto mechanics depends on the supply of auto parts.

• The demand for health care depends on the cost of health care.

1. The quantity demanded of labor will increase.

1. The demand for labor will decrease.

The quantity of labor supplied will increase.

1. The supply of labor will decrease.

1. The supply of labor will increase.

A decrease in wage rates

An increase in worker productivity

A decrease in the price of the product that the labor is used to produce

• An increase in wage rates

Greater preference for leisure rather than work

The supply of automobile workers increases resulting in lower wages and employment.

The demand for automobile workers decreases resulting in higher wages and employment.

The supply of automobile workers decreases resulting in higher wages and employment.

The demand for automobile workers increases resulting in higher wages and employment.

There is no impact on the labor market, since the change in demand is in the product market.

• An increase in worker productivity

• An increase in the wage rate

An increase in the preference for leisure

A decrease in the price of the product that the labor is used to produce

A decrease in the wage rate

Employ more labor and less capital because the marginal product of labor is greater than the marginal product of capital.

Employ less labor and more capital because the firm is currently spending $2,000 on labor and only $1,600 on capital.

Employ more labor and less capital because the firm already employs 40 units of capital and only 20 units of labor.

Employ less labor and more capital because the marginal product per dollar spent on labor is less than the marginal product per dollar spent on capital.

Employ less labor and more capital because a unit of labor costs $100 while a unit of capital costs only $40.

fewer workers and pay a lower wage

fewer workers and pay the same wage

the same number of workers and pay a lower wage

more workers and pay a lower wage

more workers and pay the same wage