1. A competitive, profit-maximizing firm will chooseto hire workers up to the point where the value ofthe marginal product:a. begins to decrease.b. is equal to the wage.c. is equal to zero.d. is equal to the product price.

A competitive firm has to make cost and revenue decision to maximize the benefit from making…

Answered: 1. A competitive, profit-maximizing…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 2CQQ

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Table 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and the price at which the film can sell output in the perfectly competitive market where it operates. What is the value of the marginal product at each level of labor? If the firm operates in a perfectly competitive labor market where the going market wage is 12, what is the films profit maximizing level of employment?
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A firm will be better off by hiring an additional worker only when: The overall benefit is greater than the overall cost of having all the workers it has. The extra benefit is greater than the extra cost of doing so. Wages in the labor market drop. O The price of what it produces increases.
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A new coffee shop opens and to maximize profit it hires 5 workers at the competitive wage rate. The price of a cup of coffee is $2 and the value of marginal product of workers in the coffee shop is $8 an hour. If the price of a cup of coffee rises from $2 to $3, the value of marginal product of the last worker hired before the price change and the number of workers hired de in % 5 A. increases; decreases B. decreases; increases C. decreases; decreases D. does not change; does not change E. increases; increases C 6 M & 7 8 O 1 9 0 Next TIP tact U =
1. A competitive firm sells its output for $30 per unit. The marginal product of the 10th worker is 20 units of output per day; the mar ginal product of the 11th worker is 16 units of output per day. The firm pays its workers a wage of $1 50 per day. a. For the 11th worker, the value of the marginal product of labor is $120. b. For the 11th worker, the value of the marginal product of labor is S$480. c. For the 11th worker, the value of the marginal product of labor is $600. d. For the 11th worker, the value of the marginal product of labor is S$2,400.
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1. ABC firms is selling potatoes in a perfectly competitive product market and hires farmers in a perfectly competitive market. Assume that the market wage rate for farmers is $150 per day. a. What rule should ABC follow to hire the profit-maximizing amount of labor? b. At the profit-maximizing level of output, the marginal product of last worker hired is 30 pounds of potatoes per day. Calculate the price of a pound of potatoes. c. Draw a diagram of the labor market for potatoes next to a diagram of the labor supply and demand for ABC. Label the equilibrium wage and quantity of labor for both the market and the firm. How are these diagrams related? d. Suppose some farmers switch to jobs in the service industry. On the side-by-side diagrams from part (c ), show how this change affects the equilibrium wage and quantity of labor for both the potatoes market and for ABC. How does this change affect the

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1. A competitive, profit-maximizing firm will choose to hire workers up to the point where the value of the marginal product: a. begins to decrease. b. is equal to the wage. c. is equal to zero. d. is equal to the product price.