Bundle: Microeconomics, Loose-leaf Version, 10th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
10th Edition
ISBN: 9781305782570
Author: William Boyes; Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 15, Problem 2E
To determine
To compute:
The marginal revenue product.
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What is the marginal Physical Productivty (MPP) of the inputs given the function Q= 18x21+2x1x2+2x22 ?
Calculate the marginal product of labor (MPL) of each worker, and then plot the MPL curve on the
following graph using the blue points (circle symbol).
Note: Remember to plot each point halfway between two integers. For example, when the number
of workers increases from 0 to 1, the MPL of 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.
100
06
MPL
80
70
60
50
40
30
20
10
4
5
LABOR (Number of workers)
The following graph shows the demand for labor for three different prices per shovel:
150
135
120
105
75
60
2.5, 40
45
30
15
3
LABOR (Number of workers)
Given the company's marginal product of labor curve shown on the second graph, line
graph shows Gopher's demand for labor when the price of a shovel is $0.50, and line
Gopher's demand for labor when the price of a shovel is $1.50.
on this
shows
MPL (Shovels per worker)
WAGE (Dollars per worker)
Terry’s Lawn Service rents five small push mowers and two large riding mowers to cut the lawns of neighborhood households. The marginal product of a small push mower is 3 lawns per day, and the marginal product of a large riding mower is 6 lawns per day. The rental price of a small push mower is $10 per day, whereas the rental price of a large riding mower is $25 per day. Is Terry’s Lawn Service utilizing small push mowers and large riding mowers in a cost-minimizing manner?
Chapter 15 Solutions
Bundle: Microeconomics, Loose-leaf Version, 10th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
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Similar questions
- Consider the following production function: Q = (6L + 3K)¹/2 1. What is the Marginal Product of Labor (MPL)? What is the Marginal Product of Capital (MPK)? Are they diminishing? 2. What is the Average Product of Labor (APL)? What is the Average Product of Capital (MPK)? 3. What is the TRSL,K? Is the absolute value of TRSLK diminishing in L or K? 4. Are there constant, decreasing, or increasing returns to scale?arrow_forwardGg.60.arrow_forwardSuppose that the price of labor (the wage rate) is $100 a day and that the rental price of capital is $50 a day. Currently the Jedie Weapons Corporation is using ten units of capital and five units of labor to produce 500 lightsabers a day. Each lightsaber sells for $2. At the current input use levels, the marginal product of capital is 40 lightsabers per day and the marginal product of labor is 60 lightsabers a day. Is the firm making an economic profit at its current levels of operation? 2. Could the firm increase its profits at the current level of output by adjusting its use of labor and capital? If so, how should input use be adjusted?arrow_forward
- Argue using a graph that the elasticity of substitution for a linear production function, f(1, k) = al + bk, is infinite. Hint: dividing by something really small makes the quotient really big.arrow_forwardSuppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourly rate. Suppose that the market price of raking someone's yard is $24 per lawn and the hourly wage is $18 per hour. The following graph shows the production function (PF) for your business. On the following graph, use the green line (triangle symbol) to plot the dally isoprofit curve that indicates the profit-maximizing level of output. (Hint: Derive the slope of the isoprofit curve and then move the curve up or down until it's in the position you want; this is because you do not know the amount of profit that will yield the desired curve.) Then use the black point (plus symbol) to indicate the profit-maximizing level of labor and output per day. Note: You will not be graded on any adjustments made to the graph. 100 90 Isoprofit 70 Profit Max 60 50 40 30 20 10 PF 30 40 50 60 70 80 90 100 10 20 LABOR (Hours per day) LAWNS…arrow_forwardWhat is the marginal physical productivity (MPP) of the inputs given the function Q=18x21+2x1x2+2x22 ? Select one: a. MPPx1=36x1+2x1MPPx2=2x1+4x1 b. MPPx1=36x1+2x1MPPx2=2x2+4x2 c. MPPx1=36+2x2+2MPPx2=2x1+4x2 d. MPPx1=36x1+2x2MPPx2=2x1+4x2arrow_forward
- Temporary Services uses four word processors and two typewriters to produce reports. The marginal product of a typewriter is 50 pages per day, and the marginal product of a word processor is 500 pages per day. The rental price of a typewriter is $1 per day, whereas the rental price of a word processor is $50 per day. Is Temporary Services utilizing typewriters and word processors in a cost-minimizing manner?arrow_forwardWhy might marginal product be increasing at lower levels of output and decreasing at higher levels of output?arrow_forwardUse the information in the table to answer the two questions that follow about Monster's Ink, a tattoo shop. Number of workers Tattoos completed Marginal product 0 1 0 8 18 25 4 28 5 30 6 31 What is the marginal product of the fourth tattoo artist? 2 3 marginal product: N/A 8 10 7 2 1 tattoos Which of the following best describes the economic reasoning behind the fact that the marginal physical product of labor declines as more labor is employed, with other inputs held constant? Monster's Ink is experiencing negative returns because hiring the third worker increases tattoo output less than hiring the fourth worker. O The tattoo shop is experiencing increasing returns because its total tattoo output increases each time a new worker is hired. Monster's Ink is experiencing diminishing returns, possibly caused by three workers getting in each other's way and needing to share tools (after sanitization, of course). There is no rational reason for tattoo output to change as it does.arrow_forward
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