Question from Past Microeconomics Qualifying ExamEdit
Spring 2006 - Section I, Question four, George Mason University
T, F, U. State first whether the following statements are true, false or uncertain. Then briefly explain your reasoning in four or five sentences. You may use a graph if it helps clarify your answer.
In atomistic competition, where the wage rate is equal to the marginal revenue product of labor, means that workers are paid according to what they produce.
False. All production is joint production. It is nonsensical to say that a particular portion of output can be attributed to any one person. The part of the statement that is incorrect is that "workers are paid according to what they produce."
FALSE: Since MRP(L) = MP(L).MR, and w = MP(L).MC, therefor MRP(L) != w
UNCERTAIN: if MC = MR, then w = MRP(L), otherwise should be false