3. CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers in a perfectly competitive labor market. (a) Draw side-by-side graphs for the labor market and for CleanIt and show each of the following. (i) The market wage, labeled Wy, and the quantity of workers hired in the market, labeled LM (ii) The marginal factor (resource) cost curve, labeled MFC (iii) The marginal revenue product curve, labeled MRP (iv) The wage paid by the firm, labeled Wf, and the quantity of workers hired by the firm, labeled L- (b) Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of CleanIt’'s workers. (i) In the short run, will the wage paid by CleanIt be higher than, lower than, or equal to Wf? Explain. (ii) In the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same? Explain.

3. CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers in a perfectly competitive labor market. (a) Draw side-by-side graphs for the labor market and for CleanIt and show each of the following. (i) The market wage, labeled Wy, and the quantity of workers hired in the market, labeled LM (ii) The marginal factor (resource) cost curve, labeled MFC (iii) The marginal revenue product curve, labeled MRP (iv) The wage paid by the firm, labeled Wf, and the quantity of workers hired by the firm, labeled L- (b) Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of CleanIt’'s workers. (i) In the short run, will the wage paid by CleanIt be higher than, lower than, or equal to Wf? Explain. (ii) In the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

I'd like help on all 3 subsections

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3. CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers
in a perfectly competitive labor market.
(a) Draw side-by-side graphs for the labor market and for CleanIt and show each of the following.
(i) The market wage, labeled WM, and the quantity of workers hired in the market, labeled LM
(ii) The marginal factor (resource) cost curve, labeled MFC
(iii) The marginal revenue product curve, labeled MRP
(iv) The wage paid by the firm, labeled WF, and the quantity of workers hired by the firm, labeled Lf
(b) Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology
increases the productivity of CleanIt's workers.
(i) In the short run, will the wage paid by CleanIt be higher than, lower than, or equal to Wr? Explain.
(ii) In the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same?
Explain.
(c) CleanIt uses capital in the form of trucks, which it rents for $10,000 each. The marginal product of the
last truck used is 100,000 units. If CleanIt is minimizing its costs and the marginal product of the last worker
hired is 500 units, calculate the wage. Show your work.

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