Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Question
Chapter 14, Problem 1RQ
To determine
Marginal revenue and cost of an additional worker.
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. Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople’s productivity. Currently, each salesperson sells an average of one car per day while being paid $20 per hour for an eight-hour day. LO17.8
What is the current labor cost per car sold?
Suppose that when the dealer raises the price of labor to $30 per hour the average number of cars sold by a salesperson increases to two per day. What is now the labor cost per car sold? By how much is it higher or lower than it was before? Has the efficiency of labor expenditures by the firm (cars sold per dollar of wages paid to salespeople) increased or decreased?
Suppose that if the wage is raised a second time to $40 per hour the number of cars sold rises to an average of 2.5 per day. What is now the labor cost per car sold?
If the firm’s goal is to maximize the efficiency of its labor expenditures, which of the three hourly salary rates should it use: $20 per hour, $30 per hour, or $40 per hour?…
(Only answer number 2 but use the info from number 1 on an excel file to show formulas used)
The table below shows your production function relating output per number of hired workers (assume no changes to the
capital and size of the convenient store.
Use the given information to find the Marginal Product of Labor.
Workers Total Output
0
0
1
2
3
4
LO
5
90
149
182
197
202
Marginal Product
A
OHire a number of workers where marginal product is positive
OHire a number of workers where marginal product is negative
OHire the number of workers where marginal product is maximized
—
←
What should determine the number of workers to hire if your goal is to maximize efficiency?
OHire as many employees as possible
OHire the minimum number of workers
Chapter 14 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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Similar questions
- A software company in Silicon Valley uses programmers (labor) and computers (capital) to produce apps for mobile devices. The firm estimates that when it comes to labor, MPL = 5 apps per month while PL = $1,000 per month. And when it comes to capital, MPC = 8 apps per month while PC = $1,000 per month. If the company wants to maximize its profits, it should: LO16.5 a. Increase labor while decreasing capital. b. Decrease labor while increasing capital. c. Keep the current amounts of capital and labor just as they are. d. None of the above.arrow_forwardComplete the following labor supply table for a firm hiring labor competitively: LO17.2 Show graphically the labor supply and marginal resource (labor) cost curves for this firm. Are the curves the same or different? If they are different, which one is higher? Plot the labor demand data of review question 2 in Chapter 16 on the graph used in part a above. What are the equilibrium wage rate and level of employment?arrow_forwardEmployment 0 1 2 3 4 5 6 Labor Demand Data Total Product 0 15 28 о Multiple Choice о O $18 $17 39 48 55 60 $15 $16 Product Price $2.20 2.00 1.80 1.60 1.40 1. 20 1.00 The table shows labor demand data on the left and labor supply data on the right. What will be the profit-maximizing wage rate? Labor Supply Data Employment 0 1 2 3 4 LO 5 6 Wage Rate $15.00 16.00 17.00 18.00 19.00 20.00arrow_forward
- Number of workers Quantity of output (Q) 0 0 1 200 2 350 3 450 500 4 Refer to the table above, which shows the quantity of output a firm will produce if it hires various numbers of workers. Suppose that the firm's output sells for $10 per unit in a purely competitive output market, and that the firm hires from a purely competitive labor market, with a market wage of $1100. How many workers should the firm hire to maximize profit? ○ 3 O 2 01 04arrow_forwardElla owns a factory that produces kitchen knives. She has eight employees, with which her factory can produce 120 knives per day. If she hired a ninth employee, she'd be knives. able to produce 130 wheelbarrows per day. Therefore, the marginal product of the ninth employee is O 12 O 10 O 15 O 14 O 11arrow_forwardConsider an individual who was employed prior to having a child. Now, they face daycare costs (M) if they choose to go back to work. Assume that they earn an hourly wage (W) and their non-labour income (YN) is greater than their daycare costs (YN > M). Despite the daycare costs, this individual chooses to work T-Lo hours per week. Draw a graph that reflects this individual's income- leisure constraint (both with and without daycare costs), utility-maximizing indifference curve (Uo) and choice of leisure hours (Lo).arrow_forward
- Employment 0 1 2 3 4 5 6 O 4-5 workers. 3-4 workers. Product O 0-1 workers. O 5-6 workers. 0 6 11 15 18 20 21 Price 5 5 5 5 5 5 On the basis of the information in the table above, if the firm is hiring workers under purely competitive conditions at a wage rate of $10, it will choose to employ between: 5 Revenue MRParrow_forwardA grocery store hires cashiers and baggers. Cashiers earn $8 an hour; baggers earn $4 an hour. The manager, who wants to maximize the number of customers served given a fixed payroll, expects the following productivity from cashiers and baggers: Number of employees 1 2 3 4 5 Multiple Choice о O Given the information in the table, what is the maximum possible number of customers that can be served with a payroll of $32? O 1,208 936 864 Total number of customers served Cashiers 240 312 440 600 712 776 Baggers 136 264 384 496 560arrow_forwardRefer to the following table. What is the average product of the 4th worker? Number of Workers 0 1 2 3 4 LO 5 6 Units of Capital 4 units of output LO 5 LO 5 5 5 5 5 LO 5 Group of answer choices 3 units of output 16 units of output 6 units of output Output 0 2 LO 5 9 16 22 23arrow_forward
- LO LL 50 45 40 20 15 WAGE (Dollars per hour) 6. Plotting the supply of labor In Philadelphia, 180 people are willing to work an hour as hostesses if the wage is $20 per hour. For each additional $5 that the wage rises above $20, an additional 45 people are willing to work an hour. For wages of $20, $25, $30, $35, and $40 per hour, plot the daily labor supply curve for hostesses on the following graph. Supply 35 25 5. 06 135 180 225 270 315 405 450 LABOR (Number of workers) What is one explanation for why this labor supply curve is upward sloping? MacBook Pro #3 24 2. 4. R M B. Narrow_forwardSuppose that the wage rate is $13 per hour and the price of the product is $2. Values for output and labor are in units per hour. b. L 0. 24 44 60 72 80 4 84 Find the profit-maximizing quantity of labor. (Assume the firm can hire up to 6 workers.) The profit-maximizing quantity of labor is worker(s). (Enter a numeric response using an integer.) Suppose that the price of the product remains $2 but that the wage rate increases to $36. Find the new profit maximizing level of L The profit-maximizing quantity of labor is worker(s). Suppose that the price of the product decreases to $1 and the wage remains at $13 per hour. Find the new profit-maximizing L.arrow_forwardSuppose that the price of the product remains at $2 and the wage at $13, but that there is a technological breakthrough that increases output by 25 percent for any given level of labor. Find the new profit maximizing L.arrow_forward
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