A manufacturer of toys is employing 50 workers and using 15 pieces of equipment to assemble toys. Currently, themarginal product of labor is 5 $ and the marginal product of capital is 25 S. Assume the market prices for labor andcapital are $12 and $20, respectivelyIs this firm maximizing its profit?A)YesB)NoWhat should this firm do with respect to its employees and its use of equipment?The firm should (1)_ the number of employees and (2)_its use of equipment.(1)A)MaintainB)ReduceC) Increase(2)A)MaintainB)ReduceC)Increase

Profit maximization, output maximization, and cost minimization is the main goal of the firm. Firm…

Answered: A manufacturer of toys is employing 50…

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter13: Factor Markets: With Emphasis On The Labor Market

Section13.1: Factor Market

Problem 1ST

See similar textbooks

Similar questions

Number ofWorkersEmployed Output(Units) MarginalProduct(Units) Value ofMarginalProduct ($)(Market Price=1$) Value ofMarginalProduct ($)(Market Price=2$) 0 0 1 8 2 22 3 36 4 56 5 60 6 72 7 82 8 89 Derive Marginal Product and Value of Marginal Product from the following table when market price for the product is 1$ and 2$ .
Consider a manufacturing firm in a labor market that isperfectly competitive. There are two kinds of workers: productiveworkers whose marginal revenue product is $48,000 per year, andlazy workers whose marginal revenue product is $40,000 per year. Itis difficult for the firm to differentiate between productive andlazy workers. A local college offers a new yearlong astronomy course. Althoughthe cost of tuition is the same for both types of workers, thepsychic cost of having to work hard and get a passing grade islower for productive workers because they are able to learn morequickly than lazy workers. Therefore, the cost of taking the class(including the cost of tuition as well as the psychic cost) is$5,000 per year for a productive worker and $10,000 per year for alazy worker. Because astronomy has little relevance tomanufacturing, taking the class does not increase or decrease aworker's productivity. The firm uses the class as a way to differentiate betweenproductive and lazy…
Suppose that labor is the only input used by aperfectly competitive firm. The firm’s productionfunction is as follows:Days of Labor Units of Output0 days 0 units1 72 133 194 255 286 297 29a. Calculate the marginal product of each additionalworker.b. Each unit of output sells for $10. Calculate thevalue of the marginal product of each worker.c. Compute the demand schedule showing thenumber of workers hired for all wages from zeroto $100 a day.d. Graph the firm’s labor-demand curve.e. What happens to this demand curve if the price ofoutput rises from $10 to $12 per unit?
SCENARIO 7.7: A lawn service company has the following production possibilities. With one, two, three, and four workers, the company can mow 4, 9, 12, and 14 lawns per day, respectively.13) Refer to Scenario 7.7. Diminishing returns to labor set in with the ________ worker.A) first B) second C) third D) fourth14) Refer to Scenario 7.7. The average product of labor with four workers isA) 3. B) 3.5. C) 4. D) 14.15) If the marginal product of labor is less than the average product of labor, then theA) marginal product must be increasing. B) average product must be decreasing.C) marginal product must be decreasing. D) Both B and C
A manager hires a labor and rents capital equipment in a very competitive market. Currently the wage rate is Gh₵ 2 per hour and capital is rented at Gh₵ 5per hour, the unit price of the product is Gh₵ 0.25 and total cost is1000. Suppose the firm’s production is as follows: Q =14K⁰L⁰+10 Required What is the amount of labor and capital the firm should employ in order to maximize profit. What is the maximum profit.
A firm is currently employing a cost-minimizing combination of labor and capital for a given level of output. The firm is employing 20 workers, and the marginal product of the last worker is 40 units of output. The firm is employing 100 units of capital, and the marginal product of the last unit of capital is 10 units of output. If the wage rate is $20 per hour, what is the price of capital? (A) $2.5 per hour (B) $5 per hour (C) $10 per hour (D) $100 per hour (E) $200 per hour
A firm uses capital and labour to produce widgets . In the short run capital is fixed ,while labour is variable . The short-run production is X = -L^3 +24l^2 +240L where X is the number of widgets produced in per week,and L is the number of workers employed .Each worker works a 40-hourweek. The wage rate is $12 per hour. a. Calculate the ranges of variables for L over which the firm is in stage 1,2 and 3 b. What is the minimum product price at which the firm will operate in the short run? c. The product price, over which the firm has no control is such that the firm's maximum posible pure profit $ 1096 per week. In order to achieve that level of profit it must employ 16 workers .How much is the firm's total cost?.
1. Mzanzi-Ndizvo (Pty) is a vaccine manufacturing company that has the following costs ofproduction. Cost of capital is R50 000, labour cost is R30 000, and the total cost the firm is willing to pay is R300,000. Identify the type of this production function and Illustrate it with a 2D graph. 2. If the demand and supply curve for cell phones is given by: D = 80 - 4P, S = 40 + 6P In a market with a price of P for smartphones, compute the number of phones that would be bought and sold at equilibrium.
A bakery operating in competitive markets sells itsoutput for $20 per cake and pays workers $10 perhour. To maximize profit, it should hire workers untilthe marginal product of labor isa. 1/2 cake per hour.b. 2 cakes per hour.c. 10 cakes per hour.d. 15 cakes per hour.
COURSE: MICROECONOMICS - PRODUCTION THEORY Suppose a company engaged in manufacture of wheat whose production function is represented by: Q =10KL.In addition, firm must pay wages of $200 and rent on capital is $600. It is known that firm has a budget of $30,000 for cheese production.a) Calculate break-even point of both factors of production and graph itb) What will happen if minimum wage is now fixed at $300? Graph itc) Assuming that new minimum wage at point b) is maintained and, assuming that investor demands a capital rent of $900, explain what happens to optimal factor level. Graph it
Consider a firm that is perfectly competitive in the market for inputs and outputs. Thefirm hires two types of workers: low-skill (high school graduates and high school dropouts) andhigh-skill (undergraduate and postgraduate degree) workers. The firm compensates high-skilledworkers at the rate wH and low-skill workers at the rate wL. It produces the output subject to aCobb-Douglas production technologyF(L,H) = (AH)α(L)β,where H - is the amount of high-skill hours, L - the amount of low-skill hours, and A - thetechnology parameter that augments the productivity of the high-skill labour. 4. In the short run, the firm cannot increase the amount of high-skill labour . Derive the1short-run demand for low-skill labour.5. What is the substitution effect of the wage increase in the short-run?6. Derive the long-run cost-minimizing demands for high- and low-skilled labour. Show thesolution to the cost-minimization problem on the graph
In each of the following four cases, MRPL and MRPC refer to the marginal revenue products of labor and capital, respectively, and PL and PC refer to their prices. Indicate in each case whether the conditions are consistent with maximum profifits for the firm. If not, state which resource(s) should be used in larger amounts and which resource(s) should be used in smaller amounts.a. MRPL = $8; PL = $4; MRPC = $8; PC = $4b. MRPL = $10; PL = $12; MRPC = $14; PC = $9c. MRPL = $6; PL = $6; MRPC = $12; PC = $12d. MRPL = $22; PL = $26; MRPC = $16; PC = $19

SEE MORE QUESTIONS

Recommended textbooks for you

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Principles of Microeconomics (MindTap Course List)

Economics

ISBN:

9781305971493

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Principles of Microeconomics (MindTap Course List)

Economics

ISBN:

9781305971493

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Microeconomics

Economics

ISBN:

9781305156050

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

SEE MORE TEXTBOOKS