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 8, Problem 2.8P
(a)
To determine
Derive and graph the marginal product curve.
(b)
To determine
The marginal cost curve when the wage is $4.
(c)
To determine
The profit maximizing output.
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Students have asked these similar questions
A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit?
The firm
A. is not maximizing profit because the marginal revenue product of labor is greater than the wage.
B. is not maximizing profit because the marginal revenue product of labor is less than the wage.
C. is maximizing profit because the marginal product of labor is greater than the wage.
D. is not maximizing profit because the price of the output is not equal to the wage.
E. is not maximizing profit because the marginal product of labor is greater than the wage.
Why does the marginal product of labor start to decrease after a certain number of workers are hired? What makes the difference?
a) The variable input continues to increase while the fixed input is fixed.
b) Both the variable and the fixed inputs are increasing at the same rate.
is it a or b?
Describe the difference between a diminishing marginal product of labor and a negative marginalproduct of labor. Why would a profit-maximizing firm always choose to operate where the marginalproduct of labor is decreasing (but not negative)?
Chapter 8 Solutions
Principles of Economics (12th Edition)
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- Suppose that firm's short-run 4 a production function is q=10/T – 1. 5.1 Find the level(s) of maximise the firm's average product of L that labour (APL). 5.2 Calculate the value of the second- order derivative (SOD) at the value of L found in 5.1 that maximises APL 5.3 Calculate the marginal product of labour (MPL) at the level(s) of L that maximises APLarrow_forwardPlease explain what numbers are being plugged in to get the answer.arrow_forwardQ7. The production function is y=L¹/aK¹/B. The price of the output is $100, w = $15, and r= $12. a. Find the optimal input of labor and capital. b. Find the optimal output which maximizes the profit.arrow_forward
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