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A company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires.

A company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 15P
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A company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires.
 
2. Graphing demand for labour and computing the optimal quantity A company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires. In the following table, complete the column for the value of the marginal product of labour (VMPL) at each quantity of workers. Labour Output (Number of workers) (Units of output) (Units of output) Marginal Product of Labour Value of the Marginal Product of Labour (Dollars) 20 1 20 19 2 39 18 3 57 15 4 72 12 84 On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show the wage rate. (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 value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between O and 1. Line segments will automatically connect the points.
Transcribed Image Text:2. Graphing demand for labour and computing the optimal quantity A company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires. In the following table, complete the column for the value of the marginal product of labour (VMPL) at each quantity of workers. Labour Output (Number of workers) (Units of output) (Units of output) Marginal Product of Labour Value of the Marginal Product of Labour (Dollars) 20 1 20 19 2 39 18 3 57 15 4 72 12 84 On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show the wage rate. (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 value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between O and 1. Line segments will automatically connect the points.
On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show the wage rate. (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 value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between O and 1. Line segments will automatically connect the points. 400 360 Demand 320 280 240 Market Wage Rate 200 160 120 B0 one worker 40 two workers three workers 1 LABOUR (Number of workers) four workers five workers The profit-maximizing quantity of labour at the market wage is WAGE(Dollars per worker)
Transcribed Image Text:On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show the wage rate. (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 value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between O and 1. Line segments will automatically connect the points. 400 360 Demand 320 280 240 Market Wage Rate 200 160 120 B0 one worker 40 two workers three workers 1 LABOUR (Number of workers) four workers five workers The profit-maximizing quantity of labour at the market wage is WAGE(Dollars per worker)
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