Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 7, Problem 2.8P
(a)
To determine
The changes in the marginal product of labor.
(b)
To determine
The changes in marginal product of labor.
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Students have asked these similar questions
A country can produce two goods, X and Y. The maximum possible output
of X is 200 and the maximum possible output of Y is 300. If the marginal
product of labor in X is 4, what is the marginal product of labor in Y?
Suppose the productivity of capital and labor are as shown in the table below. The output of these resources sells in a purely
competitive market for $1 per unit. Both capital and labor are hired under purely competitive conditions at $3 and $1, respectively.
Units of
MP of
Units of
MP of
Capital
Сapital
Labor
Labor
24
11
1
1
21
9
2
18
8
3
15
7
4
4
6
6.
3
1
7
7
1
0.5
8
CO
LO
Co
CO
Imagine you own a business firm with a friend of yours. During the first quarter
you come up with the following information that:
• Output elasticity of Capital is 0.2
• Output elasticity of Labour is 0.8
• Rate of Technological advancement is 12
a) What kind of business firm is the one that you own? Mention 2 of its
characteristics.
b) Derive the marginal productivity of capital and labour, by means of Cobb-
Douglas production function.
c) If Y = F (K, L) where K= 1000 and L= 400, determine the values of MPx and
%3D
MPL.
Chapter 7 Solutions
Principles of Economics (12th Edition)
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Similar questions
- Suppose you are considering hiring another worker. Also assume that you are at a firm that is operating at a point where the marginal product of labor is 5 and the price of each unit of labor is $2, and the marginal product of capital is 20 and the price of each unit of capital is $10. Should you hire another worker? If you hire another worker, what will happen to the marginal product of labor and why?arrow_forwardWhat is the technological difference between straight line and strictly concave production curves? Show and explain.arrow_forwardProducer Theory A firm has the following Production Function: Q=3K²L² and w=P₁= $10 r=P = $90 a) If the profit maximizing firm is committed to producing output Q = 6300 units at least cost, what are the optimal amounts of capital and labour the firm should employ? Illustrate your answerarrow_forward
- Assume that you are studying an economy which produces two goods, x and y, using two factors of production, capital K and labour L. The economy’s overall quantities of the two factors are given, and the capital intensity (the capital-to-labour ratio) in the production of y is always higher than the capital intensity in the production of x. At present there is an excess supply of y. Explain and illustrate graphically what will happen in the long run to:1) Prices of goods and production.2) factor prices and factor use intensities in each sector.arrow_forwardSolve it all on paper!arrow_forwardCon Co. produces a collectible card game. Currently, the price of capital is at $50 and the price of labor is at $10. The marginal product of capital is 200 and the marginal product of labor is 30. To minimize cost of the given output, Con Co. should Use more capital Use more capital and labor Leave capital and labor as is Use more laborarrow_forward
- Suppose Charles owns a lawn-mowing company. Assume that without workers, no yards are mowed. When he hires one worker, he is able to mow 2 yards per day. With two workers, he can mow 5 yards per day, and with three workers, he can mow 10 yards per day. The marginal product of the first worker is nothing yards per day.arrow_forwardYou are the owner of a puppet manufacturing company. Suppose that labour is the only variable input to the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labour?arrow_forwardIn the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is shown in the table below. Calculate the total labor cost and the marginal resource cost, and then fill in the blanks in the labor supply table. Instructions: Enter your answers as a whole number. Marginal Resource Total Labor Units of Labor Total Product Wage Rate Cost (Labor) Cost 10 300 $16 11 316 18 12 330 20 13 342 22 14 352 24 15 360 26arrow_forward
- Given that the level of labour is 10, the total production is 1,200, and the marginal product of labour is 200, what is the average product of labour?arrow_forwardD Question 32 BBT produces 137.5 units daily. The productivity factor of BBT's production is 2.75 and has elasticities of capital and labor of 0.4 and 0.6, respectively. In addition, the capital input used in its production is 55, 137.5, 275, and 343.75. How much is the labor input if the capital input to produce these units is 137.5? Round your answer to one decimal place.arrow_forwardPlease answer E&Farrow_forward
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