Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 16, Problem 1P
To determine
The marginal product and the marginal revenue product of labor is to be completed in the table.
Expert Solution & Answer
Explanation of Solution
Marginal product of labor is the change in total labor due to an addition of one more unit of labor.
Initial labor is q1 and initial output is Q1
So, the increase in labor by one more unit is q1+1 and the output is increased to Q2. So the marginal product of labor will be equal to MP = Q2- Q1
Marginal revenue = MPXP
The table will be completed using the above equations.
| Quantity of labor (q) | Total Output(Q) | Marginal product of labor (MP) | Marginal revenue product of laborMRP = MP X $4 |
| 0 | |||
| 1 | 250 | 250 | $1000 |
| 2 | 600 | 350 | $1400 |
| 3 | 900 | 300 | $1200 |
| 4 | 1125 | 225 | $900 |
| 5 | 1300 | 175 | $700 |
| 6 | 1450 | 150 | $600 |
| 7 | 1560 | 110 | $440 |
Economics Concept Introduction
Marginal Product:
is defined as the change in the total output due to one unit change in the input.
Marginal Revenue:
is defined as the marginal product times the price of the product that is MP XP
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Tasks
Exercise 1
Assess the following functions:
1. f(x)= x2+6x+2
2.f '(x)=10x-2x2+5
a. Find the stationary points. (5 marks)
b. Determine whether the stationary point is a maximum or minimum. (5 marks)
c. Draw the corresponding curves (5 marks)
Problem 2:
The sales data over the last 10 years for the Acme Hardware Store are as follows:
2003
$230,000
2008
$526,000
2004
276,000
2009
605,000
2005
328,000
2010
690,000
2006
388,000
2011
779,000
2007
453,000
2012
873,000
1. Calculate the compound growth rate for the period of 2003 to 2012.
2. Based on your answer to part a, forecast sales for both 2013 and 2014.
3. Now calculate the compound growth rate for the period of 2007 to 2012.
1. Based on your answer to part e, forecast sales for both 2013 and 2014.
5. What is the major reason for the differences in your answers to parts b and d? If you were to
make your own projections, what would you forecast? (Drawing a graph is very helpful.)
Exercise 4A firm has the following average cost: AC = 200 + 2Q – 36
Q
Find the stationary point and determine if it is a maximum or a minimum.b. Find the marginal cost function.
Knowledge Booster
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