3. Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas in a perfectly competitive product market. The market price for frozen peas is $4 per bag. The table below shows Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost is $500. Number of Workers Bags of Frozen Peas 1 60 140 3 250 4 320 380 6. 400 (a) When Coldbox hires the second worker, does it experience diminishing returns? Explain. (b) Calculate the average fixed cost if Coldbox hires 3 workers. Show your work. (c) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain using marginal analysis. (d) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more than, less than, or equal to the number of workers you identified in part (c) ? Explain. (e) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower, or equal to the equilibrium wage in a perfectly competitive labor market?

3. Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas in a perfectly competitive product market. The market price for frozen peas is $4 per bag. The table below shows Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost is $500. Number of Workers Bags of Frozen Peas 1 60 140 3 250 4 320 380 6. 400 (a) When Coldbox hires the second worker, does it experience diminishing returns? Explain. (b) Calculate the average fixed cost if Coldbox hires 3 workers. Show your work. (c) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain using marginal analysis. (d) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more than, less than, or equal to the number of workers you identified in part (c) ? Explain. (e) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower, or equal to the equilibrium wage in a perfectly competitive labor market?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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