Firm’s Demand for a Resource Use the following data to answer the questions below. Assume a perfectly competitive product market. a. Calculate the marginal revenue product for each additional unit of labor if output sells for $3 per unit. b. Draw the demand curve for labor based on the above data and the $3-per-unit product price. c. If the wage rate is $15 per hour, how much labor will be hired? d. Using your answer to part (c), compare the firm’s total revenue to the total amount paid for labor. Who gets the difference? e. What would happen to your answers to parts (b) and (c) if the price of output increased to $5 per unit, other things constant?

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter12: Labor Markets And Labor Unions
Section: Chapter Questions
Problem 1.1P
icon
Related questions
Question

Firm’s Demand for a Resource Use the following data to answer the questions below. Assume a perfectly competitive product market.

a. Calculate the marginal revenue product for each additional unit of labor if output sells for $3 per unit. b. Draw the demand curve for labor based on the above data and the $3-per-unit product price.

c. If the wage rate is $15 per hour, how much labor will be hired?

d. Using your answer to part (c), compare the firm’s total revenue to the total amount paid for labor. Who gets the difference?

e. What would happen to your answers to parts (b) and (c) if the price of output increased to $5 per unit, other things constant?

 

Expert Solution
steps

Step by step

Solved in 3 steps with 6 images

Blurred answer
Knowledge Booster
Competitive Markets
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.
Similar questions
Recommended textbooks for you
ECON MICRO
ECON MICRO
Economics
ISBN:
9781337000536
Author:
William A. McEachern
Publisher:
Cengage Learning
Principles of Microeconomics
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning