Assume a firms is operating in a perfectly competitive product market with an equilibrium price of P = Rp5 . The following production information (see first two columns below) is given for a firm where the amount of capital is assumed fixed. L Q W 0 0 -- 1 10 Rp20 2 19 Rp25 3 27 Rp30 4 34 Rp35 5 40 RP40 6 45 Rp45 7 49 Rp50 a. If the labor demand is perfectly competitive with an equilibrium wage of W=Rp34 , how many workers will be hired? Why? b. Suppose a union organizes the workers and successfully negotiates a wage rate of W=Rp.44. What happens to employment and output? c. Suppose the union is able to set both the wage rate and employment, say, at W=Rp.34 and L=6, respectively. Is the firm still making profit?
Assume a firms is operating in a perfectly competitive product market with an equilibrium price of P = Rp5 . The following production information (see first two columns below) is given for a firm where the amount of capital is assumed fixed. L Q W 0 0 -- 1 10 Rp20 2 19 Rp25 3 27 Rp30 4 34 Rp35 5 40 RP40 6 45 Rp45 7 49 Rp50 a. If the labor demand is perfectly competitive with an equilibrium wage of W=Rp34 , how many workers will be hired? Why? b. Suppose a union organizes the workers and successfully negotiates a wage rate of W=Rp.44. What happens to employment and output? c. Suppose the union is able to set both the wage rate and employment, say, at W=Rp.34 and L=6, respectively. Is the firm still making profit?
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
Problem 3PA
Related questions
Question
Assume a firms is operating in a
| L | Q | W |
| 0 | 0 | -- |
| 1 | 10 | Rp20 |
| 2 | 19 | Rp25 |
| 3 | 27 | Rp30 |
| 4 | 34 | Rp35 |
| 5 | 40 | RP40 |
| 6 | 45 | Rp45 |
| 7 | 49 | Rp50 |
a. If the labor demand is perfectly competitive with an equilibrium wage of W=Rp34 , how many workers will be hired? Why?
b. Suppose a union organizes the workers and successfully negotiates a wage rate of W=Rp.44. What happens to employment and output?
c. Suppose the union is able to set both the wage rate and employment, say, at W=Rp.34 and L=6, respectively. Is the firm still making profit?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Survey of Economics (MindTap Course List)
Economics
ISBN:
9781305260948
Author:
Irvin B. Tucker
Publisher:
Cengage Learning