Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 16, Problem 16.6P
To determine
To find:Number of workers to be hired and wage rate.
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Suppose that in a competitive output market, firms hire labor from a competitive labor market. The firm has a fixed number of machines and can produce the following quantities (Q) associated with the number of workers (L) in a given hour.
L: 0, 1, 2, 3, 4, 5
Q: 0, 14, 26, 36, 44, 50
The market price of the good this firm sells is $2.50. If the firm pays a wage of W=$19.00 per hour, then how many units of labor should this firm hire to maximize profit? Show your work.
a) 1 b) 2 c) 3 d) 4 e) 5
Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class). The firm has a fixed number of machines and can produce the following quantities (Q) associated with the number of workers (L) in a given time period.
L Q
0 0
1 12
2 20
3 26
4 30
5 32
The market price of the good this firm sells is $5. If the firm pays a wage of w = $19.90 per time period, then how many units of labor should this firm hire to maximize profit?
Group of answer choices
a) 1
b) 3
c) 4
d) 2
e) 5
Jumbo Enterprises is the sole producer of jumbo jets in the economy. Demand for jets is given by y=2122-201p, where y is the number of jets and p is the price of a jet. The
number of jets that Jumbo produces is a function of the number of engineers (N) that it hires. This function is given by y=0.8N. Engineers are hired in a competitive labor
market, where the wage is equal to $6.
Find Jumbo Enterprise's profit-maximizing choice of N.
Answer:
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- Suppose, the demand and supply curve in a US manufacturing firm are provided as follows: ES = 20 + 2w ED = 70 − 3w where E is the level of employment and w is the hourly wage. Let’s assume this firm shows the representative wage of the manufacturing industry. Suppose the price of each unit of capital used in this industry is $25. The price of output is constant at $50 per unit. The production function is f(E,K) = E½K ½ , so that the marginal product of labor is MPE = (½)(K/E) ½ If the current capital stock is fixed at 1,600 units, how much labor should the industry employ in the short run? How much profit will the industry earn?arrow_forwardSuppose that a firm is producing in the short run with output given by: Q = 57L - L2 The firm hires labor at a wage of $32 per hour and sells the good in a competitive market at P = $41 per unit. Find the firm’s optimal use of labor. Enter as a value. ROUND TO THE NEAREST WHOLE NUMBERarrow_forwardSuppose that the production function of a salmon farming firm is given by F(L) = 4*root(L) and it faces a price for its product of P = 200. Moreover, the firm acts as a monopsony in the labour market - located in a small town in the south - and the supply curve is w(L) = 3 + L. We ask: (a) Determine the output and level of hiring. (b) How many workers should this firm hire from the point of view of the social optimum?arrow_forward
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