Principles of Microeconomics (Second Edition)
2nd Edition
ISBN: 9780393623840
Author: Lee Coppock, Dirk Mateer
Publisher: W. W. Norton & Company
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Question
Chapter 14, Problem 3SP
(a)
To determine
Identify the marginal product and the value of the marginal product that each worker creates.
(b)
To determine
Identify the number of workers should Pam’s pretzels hire.
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Students have asked these similar questions
Suppose Fred produces 500 litres of milk every day with 10 workers. The price of milk is $12 per litre, and each worker is paid $550 daily.
If the marginal product of the last worker employed is 40 litres of milk, explain whether Fred is maximizing his profit. If not, can Fred increase his profit by employing more or fewer workers?
If Fred buys more dairy cattles, how will it affect his demand for labor? Explain with a diagram.
The following table contains the relationship between a number of trainers working at a new gym and the number of clients they can train. These clients represent the output of trainers. Clients pay $40 per session.
Number of Trainers
Clients Trained
1
10
2
50
3
80
4
100
5
110
6
115
a. Find the marginal product of labor (MPL) and the value of the marginal product of labor (VMPL) for each additional trainer hired and record these numbers in columns in the table.
b. Premier trainers earn $200 an hour. How many trainers will the gym hire?
A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit?
The firm
A. is not maximizing profit because the marginal revenue product of labor is greater than the wage.
B. is not maximizing profit because the marginal revenue product of labor is less than the wage.
C. is maximizing profit because the marginal product of labor is greater than the wage.
D. is not maximizing profit because the price of the output is not equal to the wage.
E. is not maximizing profit because the marginal product of labor is greater than the wage.
Chapter 14 Solutions
Principles of Microeconomics (Second Edition)
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- Suppose that labor is the only input used by a perfectly competitive firm. The firm’s production function is as follows: Number of Workers: 0, 1, 2, 3, 4, 5, 6, 7 Units of Output: 0, 7, 13, 19, 25, 28, 29, 29 a. Calculate the marginal product for each additional worker. b. Each unit of output sells for $10. Calculate the value of the marginal product of each worker. c. Compute the marginal profit if the wage is $100 a day. 2. Your enterprising uncle opens a sandwich shop that employs 7 people. The employees are paid $12 per hour, and a sandwich sells for $6. If your uncle is maximizing his profit, what is the value of the marginal product of the last worker he hired? What is that worker’s marginal product?arrow_forwardThe owner of a Colorado bakery is maximizing profit. K The price of a loaf of bread is $4.00, a bakery worker's wage rate is $8 an hour, and the bakery employs ten workers. What is the marginal product of the tenth bakery worker? If, when the price of a loaf of bread rises to $5.00, the bakery hires twelve workers, what is the marginal product of the twelfth worker? >>> Answer to 2 decimal places. When the price of a loaf of bread is $4.00, the marginal product of the tenth bakery worker isarrow_forwardA small speciality cookie company, whose only variable input is labor, finds that the average worker can produce 25 cookies per day, the cost of the average worker is $128 per day, an the price of a cookie $0.50. Is the firm maximizing profit? Choose the answer. It is not maximizing profit because... a. the price of the output is not equal to the wage b. the marginal product of labor is less than the wage c. the marginal revenue product of labor is greater than the wage d. the marginal revenue product of labor is less than the wagearrow_forward
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