4. Graphing demand for labor and computing the optimal quantity A company operates in a perfectly competitive market, selling each unit of output for a price of $10 and paying the market wage of $130 per day for each worker it hires. In the following table, complete the column for the marginal revenue product of labor (MRPL) at each quantity of workers. Labor Output Marginal Product of Labor Marginal Revenue Product of Labor (Number of workers) (Units of output) (Units of output) (Dollars) 0 0 15 1 15 14 2 29 12 3 41 10 4 51 6 5 57 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. Line segments will automatically connect the points. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the marginal revenue product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. WAGE (Dollars per worker) 200 180 160 140 120 100 80 60 40 20 0 0 1 2 3 LABOR (Number of workers) 5 Demand Market Wage Rate (?)
4. Graphing demand for labor and computing the optimal quantity A company operates in a perfectly competitive market, selling each unit of output for a price of $10 and paying the market wage of $130 per day for each worker it hires. In the following table, complete the column for the marginal revenue product of labor (MRPL) at each quantity of workers. Labor Output Marginal Product of Labor Marginal Revenue Product of Labor (Number of workers) (Units of output) (Units of output) (Dollars) 0 0 15 1 15 14 2 29 12 3 41 10 4 51 6 5 57 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. Line segments will automatically connect the points. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the marginal revenue product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. WAGE (Dollars per worker) 200 180 160 140 120 100 80 60 40 20 0 0 1 2 3 LABOR (Number of workers) 5 Demand Market Wage Rate (?)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. Graphing demand for labor and computing the optimal quantity
A company operates in a perfectly competitive market, selling each unit of output for a price of $10 and paying the market wage of $130 per day for
each worker it hires.
In the following table, complete the column for the marginal revenue product of labor (MRPL) at each quantity of workers.
Labor
Output
Marginal Product of Labor Marginal Revenue Product of Labor
(Number of workers) (Units of output) (Units of output)
(Dollars)
0
0
15
1
15
14
2
29
12
3
41
10
4
51
6
5
57
On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show
the wage rate. Line segments will automatically connect the points. (Note: If you cannot place the wage rate at the level you want, move the two end
points individually.)
Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the marginal
revenue product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1.
WAGE (Dollars per worker)
200
180
160
140
120
100
80
60
40
20
0
0
1
2
3
LABOR (Number of workers)
The profit-maximizing quantity of labor at the market wage is
5
Demand
Market Wage Rate
(?)
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