1. The demand for laborConsider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley'sproduction schedule for strawberries is given in the following table:Labor InputTotal Output(Number of workers) (Pounds of strawberries)0WAGE RATE (Dollars per worker)300Suppose that the market wage for strawberry pickers is $170 per worker per day, and the price of strawberries is $12 per pound.270On the following graph, use the blue points (circle symbol) to plot Live Happley's labor demand curve when the output price is $12 per pound.Note: Remember to plot each point between the two integers. For example, when the number of workers increases from 0 to 1, the marginal revenueproduct of the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automaticallyconnect the points.2402101801501209060301023450018344860701234QUANTITY OF LABOR (Number of workers)5Demand P = $12Demand P = $16(? At the given wage and price level, Live Happley should hireSuppose that the price of strawberries increases to $16 per pound, but the wage rate remains at $170.On the previous graph, use the purple points (diamond symbol) to plot Live Happley's labor demand curve when the output price is $16 per pound.Now Live Happley should hirewhen the output price is $16 per pound.Assuming that all strawberry-producing firms have similar production schedules, an increase in the price of strawberries will cause thestrawberry pickers toSuppose that wages increase to $200 due to an increased demand for workers in this market. Assuming that the price of strawberries remains at $16per pound, Live Happley will now hire

Labor Input (Number of workers)Total Output (Pounds of strawberries)00118234348460570

At the given wage and price level, Live Happley should hire Suppose that the price of strawberries increases to $16 per pound, but the wage rate remains at $170. On the previous graph, use the purple points (diamond symbol) to plot Live Happley's labor demand curve when the output price is $16 per pound. Now Live Happley should hire when the output price is $16 per pound. Assuming that all strawberry-producing firms have similar production schedules, an increase in the price of strawberries will cause the strawberry pickers to Suppose that wages increase to $200 due to an increased demand for workers in this market. Assuming that the price of strawberries remains at $16 per pound, Live Happley will now hire

At the given wage and price level, Live Happley should hire Suppose that the price of strawberries increases to $16 per pound, but the wage rate remains at $170. On the previous graph, use the purple points (diamond symbol) to plot Live Happley's labor demand curve when the output price is $16 per pound. Now Live Happley should hire when the output price is $16 per pound. Assuming that all strawberry-producing firms have similar production schedules, an increase in the price of strawberries will cause the strawberry pickers to Suppose that wages increase to $200 due to an increased demand for workers in this market. Assuming that the price of strawberries remains at $16 per pound, Live Happley will now hire

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 7PA

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