Chapter 11, Problem 5QFR

State whether the following is true or false Pure economic rent occurs when the opportunity cost of a resource is zero and there is a positive price for that resources in the market

(Resource Demand and Supply) Answer each of the following questions about the labor market: a. Which economic decision-makers determine the demand for labor? What is their goal, and what decision criteria do they use in trying to reach that goal? b. Which economic decision-makers determine the supply of labor? What is their goal and what decision criteria do they use in trying to reach that goal? c. In what sense is the demand for labor a derived demand?

Maria earns $15 per hour in her current job and works 40 hours a week. Her disutility of effort is measured as $1 per hour of work. In the case that she loses her job, she receives $5 per hour unemployment benefit. Additionally, being unemployed has psychological and social costs which is a disutility equivalent to $2 per hour. Which of the following statements is correct? Include a brief explanation (one sentence and/or equation) to justify why each statement is correct or incorrect. A). Her employment rent per hour is $3.   B). If she can get another job with the same wage rate and weekly hours after 44 weeks of being unemployed, Maria’s total employment rent is more than $10,000. C). If the unemployment benefits she could receive if she lost her job increased to $7/hour,  her employment rent would also increase. D). If her disutility of effort at her current job increased to $4/hour, her employment rent increases.

Suppose a worker is offered a wage of $5 per hour, plus a fixed payment of $40. What is the equation for the worker’s opportunity set in a given 24-hour day? What are the maximum total earnings the worker can earn in a day? The minimum? What is the price to the worker of consuming an additional hour of leisure?

Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product? Show that this condition is identical to the one that requires a profit-maximizing firm to produce the level of output where the price of the output equals the marginal cost of production.

Lucille receives an annual salary of $37,500 based on a 37.5-hour workweek. What are her gross earnings for a two-week pay period in which she works 9 hours of overtime at 1 1/2  times her regular rate of pay? (Assume there are exactly 52 weeks in a year. Round your answer to the nearest cent.)       Gross earnings  =

Case B: Jessie Pharmacy. Jessie, a pharmacist, is planning on opening her own pharmacy. Jessie Pharmacy is expected to generate yearly revenue of $500,000. Jessie will run the pharmacy herself on full-time basis. Jessie’s alternative employment options are as follows: Continue to work as a senior medical representative for $50,000 per year. Accepts a research position in another company for $70,000 per year. Jessie expects to spend $350,000 per year on purchasing drugs and cosmetics for resale to her customers. She will also need to hire three employees: an assistant, an accountant and a custodian, for whom the total salaries to be paid are expected to be $48,000 per year. Jessie owns the building in which her pharmacy is supposed to be; however, she could rent out the pharmacystore space for $42,000 per year. Calculate Jessie’s accounting profit and economic profit. In your opinion, should Jessie proceed with opening her own pharmacy? Justify your answer

An increase in land rents   a. will lead to an increase in the marginal revenue product of all inputs used in production except for the land.   b. will lead to an increase in the marginal revenue product of all inputs used in production on the land.   c. will lead to land to be used less intensively as its marginal revenue product has decreased.   d. will bring some previously zero-rent land into productive use.

Q40 Canadian rice producers use a combination of land and labour and try to minimise costs. If the relative price of land rises, then the effect on the use of inputs will be... a. No change in the land/labour ratio. b. An increase in the land/labour ratio. c. A decrease in the land/labour ratio. d. To decrease the use of land in rice production with no change in the amount of labour used. e. None of the other options are correct. Clear my choice