Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 14, Problem 8E
To determine
The equilibrium wage, quantity of labor hired, and the economic rent.
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Students have asked these similar questions
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.
Consider a fishery with the following production function where L is the number of fishermen and TP (total product) is the total number of fish caught among all fishermen. (And assume they are divided equally among the fishermen.)
L 1 2 3 4 5 6 7 8 9 10
TP 18 34 48 60 70 78 84 88 90 90
The price of fish is $3 and the wage of a fisherman is $36.
a. If the fishery is private property, how many fishermen will the owner hire? [1]
b. If the fishery is common property, how many people will come to fish? [2] (Assume people fish as a job and not for recreation here.)
c. What is the efficient number of fishermen? [3]
Suppose employment and wages are determined by an implicit contract specifying a fixed wage at which workers must supply as much labour as the firm demands. Then firms earn _________ profits and workers earn __________ income during periods of high demand, compared to the alternative in which employment and wages are determined purely by competitive labour market forces.
A. higher; higher
B. lower; lower
C. lower; higher
D.higher; lower
Chapter 14 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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