Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 6PA
To determine
Profit maximization.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Your enterprising uncle opens a sandwich shop that employs 7 people. The employees are paid $6 per hour, and a sandwich sells for $3. If your uncle is maximizing his profit, what is the value of the marginal product of the last worker he hired? What
is that worker's marginal product?
What factor limits the amount a firm can pay a worker to produce a product?
Suppose Kara maximizes her profits by hiring workers to produce hand-made soaps. Her soaps sell for $1 each. How should Kara decide on how many workers she should hire?
a.Hire workers up to the point when the price of her soaps starts to fall from $1
b.Hire workers up to the point when the total product of all her workers is at its maximum
c.Hire up to the point when the wage rate equals to the value of the marginal product of the last worker hired
d.Hire up to the point when the marginal product of the last worker hired is equal to zero
Chapter 18 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Knowledge Booster
Similar questions
- In a sandwich shop. Employees are paid €3 per hour, and a sandwich sells for €1. If the sandwich shop owner is maximizing profits, what is the value of the marginal product for the last sandwich sold? What is the marginal product?arrow_forwardWhich of the following events may increase the marginal product of labor? Check all that apply. An increase in the wage rate A technological improvement that is complementary for this type of labor A technological improvement that is substitutable for the labor in this market Good weather causes an increase in supply and a fall in price for one of the inputs used to make the goodarrow_forwardKaiser's Ice Cream Parlor produces smoothies. The market for smoothies is perfectly competitive, and the price is $4.00 a smoothie. The labor market is competitive, and the wage rate is $48.00 a day. The table shows part of the workers' total product schedule. Calculate the marginal product of hiring the fourth worker and the value of the marginal product of the fourth worker. The marginal product of hiring the fourth worker is smoothies a day. The value of the marginal product of the fourth worker is $a day. de in % 5 DOD t 6 M ||₁ & 7 u * 8 9 Workers 2 3 4 6 O 0 Smoothies per day 28 40 50 58 62 Next mpts tact Us | ✪arrow_forward
- A carpenter quits his job at a furniture factory to open his own cabinetmaking business. In his first two years of operation, his sales average $100 000 per year and his operating costs for wood, workshop and tool rental, utilities, and miscellaneous expenses average $70 000 per year. Now his old job at the furniture factory is again available. What is the lowest wage at which he should decide to return to his old job? Why?arrow_forwardClick to see additional instructions Consider a firm that exists for one period. The value of labour's marginal product is given by: VMP =Px MP, where P is the price of output, and MPL = 20 - 0.1L. The wage rate is $20. Assume that there are hiring and training costs of $40 per worker. If the firm expects the price of output to be $25, what is the optimal level of employment? Important note: Your answer needs to be rounded to 2 decimal places (e.g. 1.23). Any intermediate results should be rounded to at least 4 decimal places. Failure to do so may result in your answer not being accepted as a correct one.arrow_forwardHow do wages affect labor supply?arrow_forward
- Suppose a firm finds itself in a situation where the marginal product of the last employee hired is 4 units per hour, and the marginal product of the last machinepurchased is 10 units per hour. If the wage is $20/hour and the hourly rental rate of a machine is $50, what should this firm do if it wants to be as productive aspossible?a. Lay off workers and use more machines.b. Hire workers and use less machines.c. Lay off workers and use less machines,d. Hire workers and use more machines.e. Nothing. This firm is already operating efficiently.arrow_forwardI Collado Lumber Company is producing tons of lumber per day. The following table is the costs of production. The managers currently have six machines. The price of output is $5 per unit. The wage of the worker is $55 per worker. From economic theory, we know that the value of the marginal product is price times the marginal product of labor. According to economic theory, a worker should be hired if the value of the marginal product is greater than the marginal cost of hiring a worker. See the table below. Number of machines Number of workers Output The marginal product of labor VMP Wage Marginal cost of hiring an additional worker 6 0 0 xxx xxx $55.00 xxx 6 1 2 2 $10.00 $55.00 $55.00 6 2 14 12 $60.00 $55.00 $55.00 6 3 30 16 $80.00 $55.00 $55.00 6 4 42 12 $60.00 $55.00 $55.00 6 5 50 8 $40.00 $55.00 $55.00 6 6 56 6 $30.00 $55.00 $55.00 6…arrow_forwardKelsey owns a cotton candy shop that employs 7 people. The employees are paid $12 per hour, and a cotton candy sells for $3. If Kelsey is maximizing her profit (and operating in a perfectly competitive output and perfectly competitive labor market), what is the value of the marginal product of labor of the last worker she hired? What is this worker’s marginal product of labor?arrow_forward
- The coal mining company is the d of labor.arrow_forwardHow might a company continue to do business without paying higher wages?arrow_forwardYou are given a scenario where this a change in a factor of production or a change in demand for an item. You need to explain in sentence form how this would change demand for labor. You develop a popular video game and continue to develop new versions to keep people interested in the game.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning