Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134643175
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 14, Problem 1E
(a)
To determine
Profit maximising quantity of labor.
(b)
To determine
New Profit maximising quantity of labor as the wage increases.
(c)
To determine
New Profit maximising quantity of labor as the price increases.
(d)
To determine
Technological breakthrough and the changes.
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Students have asked these similar questions
7
3. Suppose that the wage rate is $16 per hour and the price of the product is $ 2.0. Values for output
and labor are in units per hours, as given below:
Quantity (Q)
Labor ( L)
0.
20
35
47
57
65
70
A. Find the profit-maximizing quantity of labor ( Hint: Extend the table about and calculate MPI
and MRPI first and go from there).
345
Which of the following can reduce the marginal revenue product of labor?
Select one:
a. A reduction in the demand for firms– products.
b. A reduction in workers– supply of labor to firms.
c. A decrease in firms– demand for inputs that substitute for labor.
d. An increase in the extra output firms gain from adding another unit of labor.
Chapter 14 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
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- Suppose that a firm's production is given by: Q= 10L-L² , for L= 0 to 5, where L is labor input per day and Q is output per day. Derive and draw the firm's demand for labor if the firm's output sells for $10 in a competitive market. The marginal product of labor is 10-2L. a. How many hours of labor will the firm use when the wage is $30 per day? b. How many hours of labor will the firm use when the wage is $70 per day?arrow_forwardComplete the following table with the profit-maximizing quantity of labor each salon will hire, along with the wage it will pay for each hour of labor. Labor Wage Town 1 Town 2 In Town 1, the salon pays a wage that is wage is the marginal value product of the final unit of labor hired, whereas in Town 2, the the marginal value product of the final unit of labor hired. The outcome in with respect to changes in the wage. is farther from that of a competitive market, given that the supply of labor is elastic (at the market equilibrium)arrow_forwardIn the demand for labor for a firm was expressed as L = N x average hours per employee per day. Assume a firm has 50 employees that average 6 hours per day for 300 man-hours per day. A minimum wage is passed and reduces demand to 240 man-hours per day. Answer the following questions. a. How many layoffs are required if average hours per employee are not reduced? Explain. b. If no layoffs are made, what would the average hours per employee be set to? Explain.arrow_forward
- Suppose labor is available to a firm at a cost of $12 per hour. Also suppose that employing another hour of labor adds 5 units to output and that any amount of output can be sold for $10 per unit. An additional hour of labor would add $50 in additional revenue to the firm. (Enter your response as a whole numer.) This firm should hire ▼labor.arrow_forwardvalue of average product of labor be 25 dollars.arrow_forward4. Profit maximization Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley's production schedule for strawberries is given in the following table: Labor Output (Number of workers) (Pounds of strawberries) 0 0 10 19 27 34 5 40 Suppose that the market wage for strawberry pickers is $118 per worker per day, and the price of strawberries is $16 per pound. On the following graph, use the blue points (circle symbol) to plot Live Happley's labor demand curve when the output price is $16 per pound. Note: Remember to plot each point between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product of for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points. 200 O 180 Demand P = $16 160 140 120 Demand P $12 100 80 60 40 20 0 0 5 LABOR…arrow_forward
- Leadbelly Co. sells pencils in a perfectly competitive product market and hires workers in a perfectly competitive labor market. Assume that the market wage rate for workers is $80 per day. Leadbelly should follow this rule to hire the profit-maximizing amount of labor: Hire workers up to the point where the (marginal product, value of the marginal product, or output price) is (less than, greater than, or equal to) $80 per day.arrow_forwardLABOR DEMAND, PART 1 Suppose output, Q, is produced by labor, L, and capital, K, according to the following function: Q = K ½ L½.. Suppose the firm sells each unit of output in a competitive market for a price P = $100. Suppose the firm hires each unit of labor in a competitive market for a wage W = $25. Suppose the firm has to make do for now with a stock of capital K = 49; moreover, suppose each unit of capital costs R = $75. A. How much labor will be demanded by the firm? Demonstrate and explain. B. At the "optimal" quantity of labor, what is the capital-to-labor ratio K/L? Demonstrate and explain. C. Utilizing the "optimal" quantity of labor, how much profit will the firm earn?arrow_forwardProfit maximization Suppose that the market wage for blueberry pickers is $80 per worker per day, and the price of blueberries is $15 per pound. On the following graph, use the blue points (circle symbol) to plot Blewitt's labor demand curve when the output price is $15 per pound. Note: Remember to plot each point between the two integers. For example, when the number of workers increases from 0 to 1 , the value of the marginal product of for the first worker should be plotted with a horizontal coordinate of 0.5 , the value halfway between 0 and 1 . Line segments will automatically connect the points. At the given wage and price level, Blewitt's should hire At the given wage and price level, Blewitt's should hire Suppose that the price of blueberries increases to $18 per pound, but the wage rate remains at $80. On the previous graph, use the purple points (diamond symbol) to plot Blewitt's labor demand curve when the output price is $18 per pound. Now Blewitt's…arrow_forward
- Leadbelly Co. sells pencils in a perfectly competitive product market and hires workers in a perfectly competitive labor market. Assume that the market wage rate for workers is $120 per day. Leadbelly should follow this rule to hire the profit-maximizing amount of labor: Hire workers up to the point where the is $120 per day. At the profit-maximizing level of output, the marginal product of the last worker hired is 40 boxes of pencils per day. The price of a box of pencils is $ The following graphs show the labor market for pencil workers and the labor supply and demand for Leadbelly Co. Suppose some pencil workers switch to jobs in the growing computer industry. Show how this change affects the pencil market by shifting the labor-demand curve, labor-supply curve, or both. Wage 240 216 192 168 144 120 96 72 48 24 0 Pencil Market Quantity of Labor Supply Demand Demand 1T Supplyarrow_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 depicted in the following table Suppose that for the firm, the goods market is perfectly competitive. The market price of the product is $5 at each quantity supplied by the firm Marginal Factor Cost Total Physical Product 100 109 77 117 108 124 143 130 182 135 225 What is the amount of labor that this profit-maximizing firm will hire? workers (Enter a numerio response using an integer) Labor Supplied 10 11 12 13 14 15 Hourly Wage Rate (5) 7 9 11 13 15 Total Wage Cost 50 27 31 35 39 43 Sitearrow_forwardAssuming that the price of grapes is $3 per flat, use the data in Problem 3 to calculate total revenue and marginal revenue product (MRP) and graph the MRP curve. How many pickers will be hired if the going wage rate is $9 per hour?arrow_forward
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