The table below shows the short-run production function for Mateo's Metalworks. Number of Welders 1 2 3 4 5 6 7 8 Total Product per Hour 5 11 16 20 23 25 26 25 (a) Beginning with which welder do diminishing marginal returns set in for Mateo's Metalworks? Explain using numbers. (b) Assume Mateo's Metalworks sells its welding services in a perfectly competitive market at a unit price of $10. Calculate the marginal revenue product of the seventh welder. Show your work. (c) Mateo's Metalworks hires welders in a perfectly competitive labor market for welders at a wage rate of $35 per hour, and the market price of welding services remains $10. How many welders will Mateo's Metalworks hire to maximize its profit? Explain using marginal analysis.

The table below shows the short-run production function for Mateo's Metalworks. Number of Welders 1 2 3 4 5 6 7 8 Total Product per Hour 5 11 16 20 23 25 26 25 (a) Beginning with which welder do diminishing marginal returns set in for Mateo's Metalworks? Explain using numbers. (b) Assume Mateo's Metalworks sells its welding services in a perfectly competitive market at a unit price of $10. Calculate the marginal revenue product of the seventh welder. Show your work. (c) Mateo's Metalworks hires welders in a perfectly competitive labor market for welders at a wage rate of $35 per hour, and the market price of welding services remains $10. How many welders will Mateo's Metalworks hire to maximize its profit? Explain using marginal analysis.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Include correctly labeled diagrams, if useful or required, in explaining your
answers. A correctly labeled diagram must have all axes and curves clearly
labeled and must show directional changes. If the question prompts you to
"Calculate," you must show how you arrived at your final answer.
The table below shows the short-run production function for Mateo's Metalworks.
Total Product per Hour
5
11
16
20
23
25
Number of Welders
1
2
3
4
5
6
7
8
26
25
(a) Beginning with which welder do diminishing marginal returns set in for Mateo's
Metalworks? Explain using numbers.
(b) Assume Mateo's Metalworks sells its welding services in a perfectly
competitive market at a unit price of $10. Calculate the marginal revenue product
of the seventh welder. Show your work.
(c) Mateo's Metalworks hires welders in a perfectly competitive labor market for
welders at a wage rate of $35 per hour, and the market price of welding services
remains $10. How many welders will Mateo's Metalworks hire to maximize its
profit? Explain using marginal analysis.
(d) Assume there is an increase in the productivity of all workers in the labor
market for welders. What will happen to each of the following in equilibrium?
(i) The number of workers hired in the labor market for welders. Explain.
(ii) The wage rate Mateo's Metalworks will pay its welders. Explain.

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