EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 14, Problem 2SP
To determine
Describe the reason for hiring additional worker under the given situation.
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Suppose a firm finds itself in a situation where the marginal product of the last employee hired is 4 units per hour, and the marginal product of the last machinepurchased is 10 units per hour. If the wage is $20/hour and the hourly rental rate of a machine is $50, what should this firm do if it wants to be as productive aspossible?a. Lay off workers and use more machines.b. Hire workers and use less machines.c. Lay off workers and use less machines,d. Hire workers and use more machines.e. Nothing. This firm is already operating efficiently.
Q = K x L (Quantity = capital X labor)
Are MPk and MPL diminishing?
Is MRTSL,k diminishing? (Marginal rate of technical substitution)
“After the fifth worker is hired at the hourly wage $40, the output rate increases from 64 pairs of shoes per hour to 72 pairs per hour.” Given the statement, which of the following is correct after the fifth worker is hired?
Group of answer choices
The marginal cost (MC) becomes $8.
The marginal physical product (MPP) per labor hour becomes 5.
The marginal cost (MC) becomes $5.
The marginal physical product (MPP) per labor hour becomes $40.
Chapter 14 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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