Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 18, Problem 7PA
Subpart (a):
To determine
The profit-maximizing amount of labor.
Subpart (b):
To determine
The profit-maximizing amount of labor.
Subpart (c):
To determine
The profit-maximizing amount of labor.
Subpart (d):
To determine
The profit-maximizing amount of labor.
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Taco King produces tacos
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rate is $105.00 a day
The table shows part of the workers total product schedule
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The marginal product of hiring the third worker is tacos a day
The value of the marginal product of the third worker is
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I 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
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xxx
xxx
$55.00
xxx
6
1
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$10.00
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6
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14
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$55.00
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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…
A small speciality cookie company, whose only variable input is labor, finds that the average worker can produce 25 cookies per day, the cost of the average worker is $128 per day, an the price of a cookie $0.50. Is the firm maximizing profit?
Choose the answer. It is not maximizing profit because...
a. the price of the output is not equal to the wage
b. the marginal product of labor is less than the wage
c. the marginal revenue product of labor is greater than the wage
d. the marginal revenue product of labor is less than the wage
Chapter 18 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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