Optimal condition of hiring labor.

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Answer 1

Question

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.

Economics Concept Introduction

Marginal revenue: Marginal revenue refers to the amount of extra revenue attained in the process of increasing one more unit of output.

Marginal product of labor: Marginal product of labor is the additional output a firm produces as a result of employing an extra unit of labor.

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M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.

Economics Concept Introduction

Marginal revenue: Marginal revenue refers to the amount of extra revenue attained in the process of increasing one more unit of output.

Marginal product of labor: Marginal product of labor is the additional output a firm produces as a result of employing an extra unit of labor.

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Answer 3

Question

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.

Economics Concept Introduction

Marginal revenue: Marginal revenue refers to the amount of extra revenue attained in the process of increasing one more unit of output.

Marginal product of labor: Marginal product of labor is the additional output a firm produces as a result of employing an extra unit of labor.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.

Economics Concept Introduction

Marginal revenue: Marginal revenue refers to the amount of extra revenue attained in the process of increasing one more unit of output.

Marginal product of labor: Marginal product of labor is the additional output a firm produces as a result of employing an extra unit of labor.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.

Economics Concept Introduction

Marginal revenue: Marginal revenue refers to the amount of extra revenue attained in the process of increasing one more unit of output.

Marginal product of labor: Marginal product of labor is the additional output a firm produces as a result of employing an extra unit of labor.

Answer 6

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.

Economics Concept Introduction

Marginal revenue: Marginal revenue refers to the amount of extra revenue attained in the process of increasing one more unit of output.

Marginal product of labor: Marginal product of labor is the additional output a firm produces as a result of employing an extra unit of labor.

Answer 7

Chapter 13, Problem 1RQ

To determine

Optimal condition of hiring labor.

Answer 8

Expert Solution & Answer

Explanation of Solution

When the marginal revenue of labor equals to marginal cost of labor, it is the optimal situation to hire workers in the firm. To increase the extra unit of output, the firm uses one more unit of labor. The optimal situation to hire labor is given below:

MR=WMPL

The equation can be remarriage by multiplying both sides of the equation by the marginal product of labor.

MR×MPL=W

This equation states that a firm can hire a worker until marginal revenue product of labor is equal to marginal cost of labor to the firm.