EBK MICROECONOMICS
2nd Edition
ISBN: 9780134458496
Author: List
Publisher: VST
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Question
Chapter 11, Problem 4P
To determine
The optimality of Apple’s wage payment to its employees given their productivity.
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The Zippy Paper Company has no control over either the price of paper or the wage it pays its workers. The following table shows the relationship
between the number of workers Zippy hires, total output, marginal product, and marginal revenue product of labor, with all other inputs being held
constant. Assume that the selling price is $10 per box of paper.
Labor Input
Total Output
Marginal Product
Marginal Revenue Product
Price =
$10
(Workers per day)
(Boxes of paper per day)
(Boxes of paper per day)
(Dollars)
0
0
14
2
26
36
44
5
50
AAAAAA
14
$140
12
$120
10
$100
8
$80
64
$60
$40
6
54
If the wage rate is $50.00 per day, Zippy will hire
workers.
Suppose that the workers in this industry have unionized and have collectively bargained for a wage of $70.00.
As a result of this collective bargaining agreement, Zippy will
the number of workers it hires to hire
workers.
A carpenter quits his job at a furniture factory to open his own cabinetmaking business. In his first two years of operation, his sales average $100 000 per year and his operating costs for wood, workshop and tool rental, utilities, and miscellaneous expenses average $70 000 per year. Now his old job at the furniture factory is again available. What is the lowest wage at which he should decide to return to his old job? Why?
The Zippy Paper Company has no control over either the price of paper or the wage it pays its workers. The following table shows the
relationship between the number of workers Zippy hires and total output, with all other inputs being held constant.
In the following table, for each quantity of labor input, fill in the marginal product (MP) and marginal revenue product (MRP) for Zippy. (Note: When
the price doubles, this will also double the marginal revenue product.)
Labor Input
Total Output
Marginal Product
(Workers per day)
(Boxes of paper per day)
(Boxes of paper per day)
0
14
235
26
36
44
50
AAAAAA
6
54
Assume that the selling price of paper is $10 per box.
If the wage rate is $110.00 per day, Zippy will hire
Continue to assume that the selling price of paper is $10 per box.
If the wage rate is $90.00 per day, Zippy will hire
Assume that the selling price of paper is now $20 per box.
workers.
workers.
If the wage rate remains at $90.00 per day, Zippy will hire
workers.
Marginal…
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- The Zippy Paper Company has no control over either the price of paper or the wage it pays its workers. The following table shows the relationship between the number of workers Zippy hires and total output, with all other inputs being held constant. In the following table, for each quantity of labor input, fill in the marginal product (MP) and marginal revenue product (MRP) for Zippy. (Note: When the price doubles, this will also double the marginal revenue product.) Labor Input Total Output Marginal Product Marginal Revenue Product (Workers per day) (Boxes of paper per day) (Boxes of paper per day) Price = $10 Price = $20 (Dollars) (Dollars) 0 0 1 25 2 45 3 60 4 70 5 75 6 77 Assume that the selling price of paper is $10 per box. If the wage rate is $125.00 per day, Zippy will hire ______workers. Continue to assume that the selling…arrow_forwardUse 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 $25arrow_forwardThe market for plumbers in Boston is currently in equilibrium. Labor supply is given by Ls = 3 x W and labor demand is given by Ld = 45 - W (where L = quantity of workers, Ls quantity of workers supplied, Ld = quantity of workers demanded, and W = wage). The plumbers have just unionized and have negotiated a wage of $25 for all plumbers in Boston. How many plumbers do you expect to be unemployed as the result of this change? Please round your answer to the nearest integer. %3D %3D %3Darrow_forward
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