Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 10, Problem 1.2P
To determine
Marginal product and marginal revenue product.
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You are given the following schedule for the production of pens by a firm
Labor Total Product
0 0
1 20
2 50
3 70
4 80
5 85
6 82
If pen sells for Rs 3 per unit and workers can be hired in a competitive labor market for Rs30
per day, how many workers should be hired? Explain your answers clearly.
Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas in a perfectly competitive product market. The market price for frozen peas is $4 per bag. The table below shows Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost is $500.
Number of Workers
Bags of frozen peas
0
0
1
60
2
140
3
250
4
320
5
380
6
400
a) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain using marginal analysis.
b) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more than, less than, or equal to the number of workers you identified in part (a) ? Explain.
c) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower, or equal to the equilibrium wage in a perfectly competitive market? Explain.
The following table depicts the weekly output of a firm that manufactures computer printers. The printers sell for $100 each. Calculate
the marginal product and the marginal revenue product, and then fill in the blanks in the table below.
Instructions: Enter your answers as a whole number.
Labor Input
(Workers per
Week)
Total Output
Marginal Revenue
Product
Marginal Product
|(Printers per Week)
10
200
11
218
12
234
13
248
14
260
15
270
16
278
If the weekly wage paid to workers is $1,600, the optimal number of workers
hire is
Chapter 10 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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Similar questions
- What determines the demand for labor for a firm operation in a perfectly competitive out market?arrow_forwardAre there fixed costs in the lung-run? Explain briefly.arrow_forwardUsing the information from the table below, what is the marginal cost of increasing output from 32 to 40 knit scarves per week if the weekly wage is $200? [Table description: The first column contains number of workers. The second column shows output. The third and fourth column contain average product and marginal product, respectively.] Number Average Marginal Product of workers Output Product 0 0 2 3 A 5 10 10 10 10 12 22 22 11 10 32 10.67 40 10 46 9.2 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer a $50 b $25 525 c $200 d $4arrow_forward
- Calculate the Marginal Product (MP) at each input level. If the price of printer is $100 each, calculate the Value of the Marginal of labor (VMPL). If the wage rate (per week) is $1800 , how many workers will be employed? If the firm decides to hire 14 workers, what is the maximum wage the firm would be willing to pay?arrow_forwardThe following table shows the production function for a company. This company sells its product in a perfectly competitive product market at a price of $4 each and hire labor in a perfectly competitive labor market at a wage of $450 per week. Calculate the Marginal MarginalProduct of the 1st, 2nd, and 3rd. Calculate the Value ofMarginal Product of the 1st, 2nd, and 3rd How many workers should it hire? How do you know? Explain your answer. Show formulas and some of your calculations.arrow_forwardCalculate the marginal product of labor (MPL) of each worker, and then plot the MPL curve on the following graph using the blue points (circle symbol). Note: Remember to plot each point halfway between two integers. For example, when the number of workers increases from 0 to 1, the MPL of the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points. 100 06 MPL 80 70 60 50 40 30 20 10 4 5 LABOR (Number of workers) The following graph shows the demand for labor for three different prices per shovel: 150 135 120 105 75 60 2.5, 40 45 30 15 3 LABOR (Number of workers) Given the company's marginal product of labor curve shown on the second graph, line graph shows Gopher's demand for labor when the price of a shovel is $0.50, and line Gopher's demand for labor when the price of a shovel is $1.50. on this shows MPL (Shovels per worker) WAGE (Dollars per worker)arrow_forward
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