Econowaugh AP: Perfectly Competitive Resource Market 2 - Perfectly Competitive Output & Labor Market

Resource Markets 2 - Perfect Competition - output and resource - FRQ's

2008B AP Microeconomics Exam - Look at (Resource Markets #1).

2005 AP Microeconomics Exam - FRQ's #3

Watch me answer it here

a) In what kind of market structure does this firm sell its output? Look at the directions above,,, "The firm can sell all the shirts it can produce to retailers at the price of $20 dollars. Read it again,"The firm can sell all the shirts it can produce to retailers at the price of $20 dollars. Read it again,"The firm can sell all the shirts it can produce to retailers at the price of $20 dollars. Question - can a monopoly sell all the goods it wants at the same price,,, NO., it must lower its price to sell more.. Only a perfectly competitive (price taker) industry market could do this....
(Answer: Perfectly Competitive Market)

b) In what kind of market structure does this firm hire its workers? Again, look at the directions, "P & L can hire all of the workers it wants at a market wage rate of $120 per day per worker. Read it again, "P & L can hire all of the workers it wants at a market wage rate of $120 per day per worker." Read it again, "P & L can hire all of the workers it wants at a market wage rate of $120 per day per worker." (Answer: this is a Perfectly Competitive (price taker) labor market.)

The rest is self explanatory - use a chart!!!

2007 AP Microeconomics FRQ, #2

watch me answer it here

https://youtu.be/HBKyr2hCIJA

a) draw a CLG of the firm's supply curve for unskilled labor.

Remember, a firm in a perfectly competitive market, that can hire all it wants at the wage rate of $90 a day per worker has a horizontal labor supply curve.

c) productivity increases what happens to quantity of labor and wage rate.

Notice, with the increase productivity (MP of labor has increased) and the firms demand for labor shifts right (increases) more labor is desired. Because the Perfectly Competitive firm's productivity happens to it first the market is unaffected and therefor the wage rate is unchanged.

2003B AP Microeconomics Exam FRQ, #3

watch me answer it here

https://youtu.be/0MZWE4na9tc

Make a chart:

a) a profit max = MRP = MRC (MFC) marginal factor cost
b) how many workers to Profit Max - 4 or 5,
c) wage rate is reduced to $6 an hour - Chart!!!

how many workers? at wage rate of $6,,, 5 or 6 workers will be hired. as MRP = MRC at the 6th worker but the firm is indifferent to the sixth worker as he costs as much as he brings in.

d) price of pencils drops to $1 per dozen and the $6 rate stays the same. Chart!!!

at a price of $1 the MRP decreases where the firm to profit max will only hire 2 or 3 workers.

2006B AP Microeconomics Exam FRQ, #3

2011 AP Microeconomics Exam FRQ, #2

c) could be tricky, unless you read the question where it stated that assume avocado producers hire from a perfectly competitive labor market. Also that MFC and MRC are the same thing.