3. Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas in a perfectly competitive product market. The market price for frozen peas is $4 per bag. The table below shows Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost is $500. Number of Workers Bags of Frozen Peas 1 60 140 3 250 4 320 380 6. 400 (a) When Coldbox hires the second worker, does it experience diminishing returns? Explain. (b) Calculate the average fixed cost if Coldbox hires 3 workers. Show your work. (c) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain using marginal analysis. (d) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more than, less than, or equal to the number of workers you identified in part (c) ? Explain. (e) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower, or equal to the equilibrium wage in a perfectly competitive labor market?
3. Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas in a perfectly competitive product market. The market price for frozen peas is $4 per bag. The table below shows Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost is $500. Number of Workers Bags of Frozen Peas 1 60 140 3 250 4 320 380 6. 400 (a) When Coldbox hires the second worker, does it experience diminishing returns? Explain. (b) Calculate the average fixed cost if Coldbox hires 3 workers. Show your work. (c) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain using marginal analysis. (d) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more than, less than, or equal to the number of workers you identified in part (c) ? Explain. (e) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower, or equal to the equilibrium wage in a perfectly competitive labor market?
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 15P
Related questions
Question
![20:16
.ll 4G
APmicro-FRQ-3.3.png
3. Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas
in a perfectly competitive product market. The market price for frozen peas
Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost
is $500.
$4 per bag. The table below shows
Bags of
Frozen Peas
Number of
Workers
1
60
2
140
3
250
4
320
5
380
6.
400
(a) When Coldbox hires the second worker, does it experience diminishing returns? Explain.
(b) Calculate the average fixed cost if Coldbox hires 3 workers. Show your work.
(c) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain
using marginal analysis.
(d) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more
than, less than, or equal to the number of workers you identified in part (c) ? Explain.
(e) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower,
or equal to the equilibrium wage in a perfectly competitive labor market?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78b210b8-e61e-4d83-b7d0-f2aa3bcd3461%2Fb0c727b8-ab1f-44d9-a35e-fe66e57b8d75%2F640adwm_processed.png&w=3840&q=75)
Transcribed Image Text:20:16
.ll 4G
APmicro-FRQ-3.3.png
3. Coldbox Corporation hires its workers in a perfectly competitive labor market and produces and sells frozen peas
in a perfectly competitive product market. The market price for frozen peas
Coldbox' short-run production of frozen peas. Labor is the only variable input. Coldbox Corporation's fixed cost
is $500.
$4 per bag. The table below shows
Bags of
Frozen Peas
Number of
Workers
1
60
2
140
3
250
4
320
5
380
6.
400
(a) When Coldbox hires the second worker, does it experience diminishing returns? Explain.
(b) Calculate the average fixed cost if Coldbox hires 3 workers. Show your work.
(c) If the wage is $200 per worker, identify the profit-maximizing number of workers for Coldbox. Explain
using marginal analysis.
(d) If the price of frozen peas decreases by $2 per bag, would the number of workers hired by Coldbox be more
than, less than, or equal to the number of workers you identified in part (c) ? Explain.
(e) Suppose that Coldbox hires workers from a monopsonistic labor market. Would the wage be higher, lower,
or equal to the equilibrium wage in a perfectly competitive labor market?
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