Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 2.1P
(a)
To determine
The marginal product of labor.
(b)
To determine
The marginal revenue product.
(c)
To determine
The quantity of laborers employed and the output produced.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Why does the marginal product of labor start to decrease after a certain number of workers are hired? What makes the difference?
a) The variable input continues to increase while the fixed input is fixed.
b) Both the variable and the fixed inputs are increasing at the same rate.
is it a or b?
A firm's production function is:
q = 20L1/2K1/2
where q is the firm's total product, L is the quantity of labor employed, and K is the quantity of capital employed. The price of labor is $25 per unit and the price of capital is $100 per unit.
a. What is the equation for the marginal product of labor?
b. What is the equation for the marginal product of capital?
c. Given the price of labor is $25 per unit and the price of capital is $100 per unit, what is the cost-minimizing combination of capital and labor that can produce 800 units of output?
Suppose you are considering hiring another worker. Also assume that you are at a firm that is operating at a point where the marginal product of labor is 5 and the price of each unit of labor is $2, and the marginal product of capital is 20 and the price of each unit of capital is $10. Should you hire another worker?
If you hire another worker, what will happen to the marginal product of labor and why?
Chapter 10 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $2.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. Hours of Labor Output 1 50 2 90 3 120 4 140 5 150 155 157 6. The marginal product of labor for the first hour of labor is || (Enter your response as an integer.) The value of the marginal product of labor for the first hour of labor is. (Round your response to two decimal places.) If the wage paid to workers in Die Cast's plant is $25/hour, it should employ worker(s). (Enter your response as an integer.) If the wage paid to workers in Die Casť's plant is $35/hour, it should employ worker(s). (Enter your response as an integer.) If the wage is $25/hour, but the price of a bracket declines to $1.50, it should employ worker(s). (Enter your response as an…arrow_forwardA small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit? The firm A. is not maximizing profit because the marginal revenue product of labor is greater than the wage. B. is not maximizing profit because the marginal revenue product of labor is less than the wage. C. is maximizing profit because the marginal product of labor is greater than the wage. D. is not maximizing profit because the price of the output is not equal to the wage. E. is not maximizing profit because the marginal product of labor is greater than the wage.arrow_forwardThe following is a production function. 50,000- 45,000- 40,000- Draw a graph of marginal product as a function of labor. 35,000- 30,000- 25,000- Total output (Q) 20,000- 15,000- 10,000 ng 5,000- 0+ 0 200 100 300 Units of labor (L) 400 L Q 1.) Using the line drawing tool, graph the marginal product curve from 0 to 100 units of labor. Label this line 'MP Segment 1" 2.) Using the line drawing tool, graph the marginal product curve from 100 to 300 units of labor. Label this line 'MPS Note: Carefully follow the instructions above and only draw the required objects. Does this graph exhibit diminishing returns? Explain your answer. ○ A. Yes, it does exhibit diminishing returns, because the marginal product of labor decreases. B. No, it does not exhibit diminishing returns, because the marginal product of labor is zero. ○ C. No, it does not exhibit diminishing returns, because the marginal product of labor is increasing. ○ D. Yes, it does exhibit diminishing returns, because the marginal…arrow_forward
- Please answer quicklyarrow_forwardThe following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000. AP, MP 100 80 Average and marginal product of labor- 60 10 20 20 MP AP L 0 20 40 60 80 100 120 140 160 Labor When the firm uses 40 units of labor, what is marginal cost at this level of output? $70 ○ $35 ○ $60 $280arrow_forwardThe following table depicts the weekly output of a firm that manufactures computer printers. The printers sell for $100 each. Calculate the marginal product and the marginal revenue product, and then fill in the blanks in the table below. Instructions: Enter your answers as a whole number. Labor Input (Workers per Week) Total Output Marginal Revenue Product Marginal Product |(Printers per Week) 10 200 11 218 12 234 13 248 14 260 15 270 16 278 If the weekly wage paid to workers is $1,600, the optimal number of workers hire isarrow_forward
- K 300- 250- 200- 150- 100- 50- 0+ 0 100 200 300 400 Units of labor (hours) Assuming the price of the output, Px, is equal to $2, graph the firm's marginal revenue product schedule (MRP) as a function of the number of labor units hired. Using the multipoint curved line drawing tool, graph the firm's marginal revenue product curve. Label this curve 'MRP'. Note: Carefully follow the instructions above and only draw the required object. If the current equilibrium wage rate is $2 per hour, how many hours of labor will you hire? You will hire integer.) hours of labor. (Enter your response as an Marginal revenue product (output) 4.00 3.00- 2.00- 1.00- 0.00+ 0 100 200 Units of labor (hours) 300 400 After plotting the final point of your multipoint curve, press the Esc key on your keyboard to end the line. How much output will you produce? You will produce units of output. (Enter your response as anarrow_forwardA firm produces good Y with just 2 factors: Capital which is fixed in supply and labour which is variable. Identify the stages of production in the diagram and explain why the firm still hire labour even though it is in the range of diminishing returns. What is the number of workers after which diminishing marginal returns starts? Is this a short run or long run phenomenon? Labour (units) 1 2 3 4 5 6 7 8 9 Total Product (TP) in Units 8 15 24 30 35 37 38 38 36 Average Product (AP) in units 8 7.5 8 7.5 7 6.17 5.43 4.75 4 Marginal Product (MP) in units 8 7 9 6 5 2 1 0 -2arrow_forwardIn the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is shown in the table below. Assume the product price is $2. a. Calculate the marginal revenue product and the marginal resource cost, and then fill in the blanks in the labor supply table. Instructions: Enter your answers as a whole number. Marginal Marginal Resource Units of Total Labor Marginal Product Wage Rate Total Product Revenue Labor Cost Product (Labor) Cost 10 200 $11 $110 11 220 20 12 132 12 238 18 13 156 13 254 16 14 182 14 268 14 15 210 15 280 12 16 240 b. What are the equilibrium wage rate and level of employment? Equilibrium wage rate = $ %3D Equilibrium level of employment workersarrow_forward
- Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers. 0 1 2 3 4 5 6 Units of Output 0 38 85 150 220 320 380 The marginal product of the fourth worker isarrow_forwardFrom the production data in the table below, calculate the VMP, for the 2nd unit of labor. Assume the wage rate is $80 and the price of the firm's output is $5. (Give the numeric value only for your response; do not include commas, dollar signs, etc.) Capital Labor Output (Q) 100 100 1 20 100 44 100 66 100 4 84 100 96 100 104 100 7 98 Numeric Responsearrow_forwardFollowing is information on the production levels of three different firms. Firm A is currentlyproducing at a quantity where it is experiencing increasing returns. Firm B is currentlyproducing at a quantity where it is experiencing diminishing returns. Firm C is currentlyproducing at a quantity where it is experiencing negative returns.a. If each of the firms cut back on its labor force, what will happen to its marginalproduct of labor? And why?b. If each of the firms adds to its labor force, what will happen to its marginal product oflabor? And why?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning