The maximum hiring decision of a firm.

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CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers in a perfectly competitive labor market. a. Draw side-by-side graphs for the labor market and for CleanIt and show each of the following. i. the market wage, labeled Wm and the quantity of workers hired in the market, labeled Lm ii. the marginal factor (resource) cost curve, labeled MFC iii. the marginal revenue product curve, labeled MRP iv. the wage paid by the firm, labeled Wf and the quantity of workers hired by the firm labeled Lf b. Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of CleanIt's workers. i. in the short run, will the wage paid by CleanIt be higher then, lower than, or equal to Wf? Explain. ii. in the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same? Explain. c. CleanIt uses capital in the form of trucks, which it rents for $10,000 each. The marginal…

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Chapter 11, Problem 7SQ

To determine

The maximum hiring decision of a firm.

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CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers in a perfectly competitive labor market. a. Draw side-by-side graphs for the labor market and for CleanIt and show each of the following. i. the market wage, labeled Wm and the quantity of workers hired in the market, labeled Lm ii. the marginal factor (resource) cost curve, labeled MFC iii. the marginal revenue product curve, labeled MRP iv. the wage paid by the firm, labeled Wf and the quantity of workers hired by the firm labeled Lf b. Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of CleanIt's workers. i. in the short run, will the wage paid by CleanIt be higher then, lower than, or equal to Wf? Explain. ii. in the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same? Explain. c. CleanIt uses capital in the form of trucks, which it rents for $10,000 each. The marginal…

At the bottom of the page, complete the labor demand table for a fifirm that is hiring labor competitively and selling its product in a competitive market.a. How many workers will the firm hire if the market wage rate is $27.95? $19.95? Explain why the firm will not hire a larger or smaller number of units of labor at each of these wage rates.b. Show in schedule form and graphically the labor demand curve of this firm.c. Now again determine the firm’s demand curve for labor, assuming that it is selling in an imperfectly competitive market and that, although it can sell 17 units at $2.20 per unit, it must lower product price by 5 cents in order to sell the marginal product of each successive labor unit. Compare this demand curve with that derived in question 2b (part b of this question). Which curve is more elastic? Explain.

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