Crowdly

If a graph shows a rightward shift of the labour demand curve, what might happen to the impact of a previously binding minimum wage?

It lowers wages

It shifts the supply curve

It causes more unemployment

It might become non-binding

Which of the following can shift the MRP (labour demand) curve?

Change in labour union policy

Change in wage rate

Movement along the supply curve

Change in productivity

Why is the MRP curve downward sloping?

Because wages increase with employment

Due to the law of diminishing marginal returns

Because of decreasing selling prices

Because total revenue falls with more labour

In the graph, a minimum wage is introduced above the equilibrium wage. What area on the graph represents unemployment?

The horizontal distance between the quantity of labour demanded and supplied at the minimum wage

The area under the demand curve

The vertical distance between the minimum wage and the equilibrium wage

The total number of people in the labour force

Fixing a minimum wage in a perfectly competitive labour market can prevent the attainment of an equilibrium wage.

The marginal revenue product (MRP) curve represents the demand curve for labour.

A perfectly competitive market is described as a market with

a few firms producing differentiated goods.

a few buyers, many sellers and the production of differentiated goods.

many buyers, many sellers and the production of homogenous goods.

a large number of firms that each individually sets the price of their goods.

Use the diagram below which diagram shows the short-run conditions of a firm in a perfectly competitive market to answer the question.

In the long run, ____ firms will ____ the industry so that the market supply curve shifts to the _____, until prices ______ sufficiently so that all firms make a normal profit only.

new firms; enter; right; decrease.

existing firms; exit; left; increase.

new firms; enter; left; increase.

existing firms; exit; right; decrease.