LABOR ECONOMICS (LL+ACCESS)
8th Edition
ISBN: 9781264909339
Author: BORJAS
Publisher: MCG
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Chapter 10, Problem 6RQ
To determine
Explain the difference between efficient contract and strong efficient contract.
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Use the following information to answer the following questions:
Mickey L. Douglas, owner of MLD Incorporated, knows that the marginal product of labor (MPL) for his
workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q=32L-1/2 L²
He also knows that the price of his output is $3. His profits can be found as:
Profit=(PxQ)-(W x L)
What wage would be required to allow Mickey to hire the twenty-fifth worker?
O $21
O $7
O $125
O $3
$25
Table 18-8
The following table shows the production
function for a particular business. The
numbers represent the various labor and
output combinations the firm may choose for
its output on a daily basis.
Labor Output
0
0
70
130
180
220
250
123
4
5
Refer to Table 18-8. Suppose this firm
charges a price of $5 per unit of output and
pays workers a wage equal to $160 per day.
How many workers should this firm hire to
maximize its profit?
2 workers
3 workers
4 workers
5 workers
Please answer quickly
Chapter 10 Solutions
LABOR ECONOMICS (LL+ACCESS)
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
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- Suppose a firm produces the following products. Calculate and fill in the missing values in the table below. (Round your answers to the nearest whole number.) Marginal product of Value of marginal Product Number of workers Price per unit labor product of labor A 10 170 $1,200 20 130 $12 25 130 $14 30 90 $1,200 In the above case, when the daily wage of the workers is $1400, then the firm will produce the products only after reducing the number of workers employed. The firm observes with the help of the that as additional labor is employed, the quantity produced for product A increases.arrow_forwardConsider the following table illustrating the hourly production of zidgets. Furthermore, suppose the wage rate is $15/hour; however, there are two firms, Firm A and Firm B, where Firm A has fixed cost of $10/hour and Firm B has fixed cost of $20/hour. L (workers) Q (units) 1 50 90 3 120 Firm B's total cost of producing Firm A's total cost of producing 90 zidgets is 90 zidgets. O greater than less than equal to not enough informationarrow_forwardEldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?arrow_forward
- In 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. Units of Labor 10 11 12 13 14 15 Total Product 200 214 226 236 244 250 Wage Rate $7 8 9 10 11 12 Total Labor Cost 700 X 1,712 X 2,035 X 2,360 X 2,684 X 3,000 X Marginal Resource (Labor) Cost 1,012 X 323 X 325 x 324 X 316 Xarrow_forwardThe Labor Market The following two graphs show the labor market condition in an industry of a hypothetical country. The firms in this country are perfectly competitive in the output market. The labor market is also perfectly competitive. Assume that each workday has 8 hours in it and there are 20 workdays in a month. Now let's do some number crunching. Demand Side of the Market The following graph shows marginal product of labor (MPL) faced by an individual firm. For example, it shows that the first worker hired will produce 110 units of the product. The second worker will produce 100 units. There are 1,000 identical firms in the industry. The market price of the product produced is $40 per unit. MPL 130 120 110 100 90 80 70 60 50 40 30 20 10 0 0 1 2 3 4. 5 6 7 9 10 11 Labor (Persons)arrow_forwardWidget factory Inc. in Wisconsin has the following production function: F(L,K)=2L L represents the number of labours hours. Workers at this factory are paid an hourly wage of $30 and they rent capital at$25/ hour.since this is a competitive market, the factory output is $50 per unit. Let's pretend the firm operates in the short run with capital fixed at 900, how many workers would widget factory Inc employ? What is their profit rate?arrow_forward
- Explain how the marginal cost of labor (MCL) curves differ between a firm in a perfectly competitive input market and a firm in a non-perfectly competitive input market, and illustrate on a graph.arrow_forwardSuppose 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_forwardGive type answerarrow_forward
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