PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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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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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?
Barb's Bakery employs three workers who
produce 6 cakes per hour. After Barb
hires a fourth worker, production
increases to 12 cake per hour. Which of
the following statements is TRUE?
a.
b.
C.
d.
Because the marginal product
of the fourth worker is greater
than the average product of
three workers, the average
product must rise.
Because the marginal product
of the fourth worker is less
than the average product of
three workers, the average
product must fall
Because the marginal product
of the fourth worker is less
than the average product of
three workers, the average
product must rise.
Because the marginal product
of the fourth worker is greater
than the average product of
three workers, the average
product must fall.
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.
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