Consider a competitive, price-taking firm that employs only one variable input, labor, to produce a product that sells for $14 per unit. The wage rate is $24 per unit of labor and total fixed costs are $500. Fill in the blanks in each column of this table as instructed by the questions below: a)Fill in the blanks in columns 3 and 5. Marginal product begins to diminish beyond ________ units of labor. Marginal product is negative for the _____th unit of labor. b- Compute marginal and average revenue products and fill in the blanks in columns 4 and 6. The sixth unit of labor _________________ (increases, decreases) _______________ (total, marginal) revenue by $__________. Decreasing labor usage from three to two units _______________ (increases, decreases) _______________ (total, marginal) revenue by $___________. c- The manager hires _____8___ units of labor in order to maximize profit. At this level of labor usage, ARP = _____________ which is ______________ (greater, less) than MRP.
Consider a competitive, price-taking firm that employs only one variable input, labor, to produce a product that sells for $14 per unit. The wage rate is $24 per unit of labor and total fixed costs are $500. Fill in the blanks in each column of this table as instructed by the questions below: a)Fill in the blanks in columns 3 and 5. Marginal product begins to diminish beyond ________ units of labor. Marginal product is negative for the _____th unit of labor. b- Compute marginal and average revenue products and fill in the blanks in columns 4 and 6. The sixth unit of labor _________________ (increases, decreases) _______________ (total, marginal) revenue by $__________. Decreasing labor usage from three to two units _______________ (increases, decreases) _______________ (total, marginal) revenue by $___________. c- The manager hires _____8___ units of labor in order to maximize profit. At this level of labor usage, ARP = _____________ which is ______________ (greater, less) than MRP.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Consider a competitive,
labor, to produce a product that sells for $14 per unit. The wage rate is $24 per unit
of labor and total fixed costs are $500. Fill in the blanks in each column of this
table as instructed by the questions below:
a)Fill in the blanks in columns 3 and 5. Marginal product begins to diminish
beyond ________ units of labor. Marginal product is negative for the _____th
unit of labor.
b- Compute marginal and average revenue products and fill in the blanks in
columns 4 and 6. The sixth unit of labor _________________ (increases,
decreases) _______________ (total, marginal) revenue by $__________.
Decreasing labor usage from three to two units _______________ (increases, decreases) _______________ (total, marginal) revenue by $___________.
c- The manager hires _____8___ units of labor in order to maximize profit. At
this level of labor usage, ARP = _____________ which is ______________
(greater, less) than MRP.
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5.
Columns 1–8 in your table should look like this:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Marginal
Product
Marginal
Revenue
Product
Average
Revenue
Product
Units of
Average
Product
Marginal
Cost
Profit when
Labor
Output
TFC = $500
XX
XX
XX
XX
XX
-500
1
8
8
112
8
112
3
-412
2
20
12
168
10
140
2
-268
3
34
14
196
11.33
158.62
1.71
-96
4
45
11
154
11.25
157.5
2.18
34
53
8
112
10.6
148.4
3
122
58
70
9.67
135.38
4.80
168
7
61
3
42
8.71
121.94
8
186
8
63
28
7.87
110.18
12
190
9.
64
1
14
7.11
99.55
24
180
10
62
-2
-28
6.2
86.8
XX
128
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G x 4) ENG
11-03-2022
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