Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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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.
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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)
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