Leadbelly Co. sells pencils in a perfectly competitiveproduct market and hires workers in a perfectly compel·ilive labor market. Assume tha t the market wage ra le forworkers is $150 per day.a. What rule should Leadbcily follow to hire theprofit-maximizing ammmt ol labor?b. Al the profit-maximizing level of output, the marginal product of the last worker hirro is 30 boxesof pencils per day. Calculate the price of a box ofpencils.c. Draw a diagram of the labor market fo r pencil wo.rkers (as in Figure 4 ol this chapter) next to a diagramof the labor supply and demand for Leadbelly Co. (asin Figure 3). Label the equilibrium wage and quanti tyof labor lor both the market and the lirm. How arethese d iagrams related?d. Suppose some pencil workers switch to jobs in thegrowing computer industry. On the sidc,-by-5idediagrams from part (c), show how this changeaffects the equilibrium wage and quantity o( laborlor both the pencil market and lor Leadbelly. Howdocs this change affect the marginal product of laborat Leadbell
Leadbelly Co. sells pencils in a perfectly competitive
product market and hires workers in a perfectly compel·
ilive labor market. Assume tha t the market wage ra le for
workers is $150 per day.
a. What rule should Leadbcily follow to hire the
profit-maximizing ammmt ol labor?
b. Al the profit-maximizing level of output, the marginal product of the last worker hirro is 30 boxes
of pencils per day. Calculate the price of a box of
pencils.
c. Draw a diagram of the labor market fo r pencil wo.rkers (as in Figure 4 ol this chapter) next to a diagram
of the labor
in Figure 3). Label the equilibrium wage and quanti ty
of labor lor both the market and the lirm. How are
these d iagrams related?
d. Suppose some pencil workers switch to jobs in the
growing computer industry. On the sidc,-by-5ide
diagrams from part (c), show how this change
affects the equilibrium wage and quantity o( labor
lor both the pencil market and lor Leadbelly. How
docs this change affect the marginal product of labor
at Leadbell
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