1. A firm's marginal revenue product (MRP) curve should slope up from left to right. In other words, the MRP curve should have a positive slope. True or false, and why?
2. Assess the degree of difficulty associated with measuring marginal revenue product for each of the following occupations. Provide a brief explanation in each case. A. Automobile mechanic B. College professor Hint: Make sure you know the definition for marginal revenue product. When an additional mechanic is hired, how much additional (marginal) revenue will that mechanic generate for the dealership or independent repair shop? Is there a way of measuring the marginal revenue? If a college hires another professor, how much marginal revenue will that professor generate for the college? Is there a way of measuring marginal revenue in this situation?
3.. Why does the MFC curve (also known as the marginal cost of labor curve) for a monopsonist slope up from left to right? In other words, why does a monopsonist's marginal cost of labor curve (MFC) have a positive slope?
4. Explain how the method used to determine the profit- maximizing level of output in product markets (i.e., MR = MC) can be applied to the labor market to determine the most profitable number of employees a firm should hire. Can you restate the equation to make it fit the labor market? Provide a brief explanation also.
5. Can you think of your own example of a monopsonist? Explain.
6. How would a strong union shift the labor supply curve in order to boost wages for union members?