Consider a competitive, price-taking firm that employs only one variable input, labor, to produce a product that sells for $14 per unit. The wage rate is $24 per unit of labor and total fixed costs are $500. Fill in the blanks in each column of this table as instructed by the questions below:   a)Fill in the blanks in columns 3 and 5. Marginal product begins to diminish beyond ________ units of labor. Marginal product is negative for the _____th unit of labor. b- Compute marginal and average revenue products and fill in the blanks in columns 4 and 6. The sixth unit of labor _________________ (increases, decreases) _______________ (total, marginal) revenue by $__________. Decreasing labor usage from three to two units _______________ (increases, decreases) _______________ (total, marginal) revenue by $___________. c- The manager hires _____8___ units of labor in order to maximize profit. At this level of labor usage, ARP = _____________ which is ______________ (greater, less) than MRP.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Question

Consider a competitive, price-taking firm that employs only one variable input,

labor, to produce a product that sells for $14 per unit. The wage rate is $24 per unit

of labor and total fixed costs are $500. Fill in the blanks in each column of this

table as instructed by the questions below:

 

a)Fill in the blanks in columns 3 and 5. Marginal product begins to diminish

beyond ________ units of labor. Marginal product is negative for the _____th

unit of labor.

b- Compute marginal and average revenue products and fill in the blanks in

columns 4 and 6. The sixth unit of labor _________________ (increases,

decreases) _______________ (total, marginal) revenue by $__________.

Decreasing labor usage from three to two units _______________ (increases, decreases) _______________ (total, marginal) revenue by $___________.

c- The manager hires _____8___ units of labor in order to maximize profit. At

this level of labor usage, ARP = _____________ which is ______________

(greater, less) than MRP.

A 10e_11_Chap_Student_Workbook.pdf - Adobe Acrobat Reader DC (64-bit)
Archivo Edición Ver Firmar Ventana Ayuda
/ 27
5.
Columns 1–8 in your table should look like this:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Marginal
Product
Marginal
Revenue
Product
Average
Revenue
Product
Units of
Average
Product
Marginal
Cost
Profit when
Labor
Output
TFC = $500
XX
XX
XX
XX
XX
-500
1
8
8
112
8
112
3
-412
2
20
12
168
10
140
2
-268
3
34
14
196
11.33
158.62
1.71
-96
4
45
11
154
11.25
157.5
2.18
34
53
8
112
10.6
148.4
3
122
58
70
9.67
135.38
4.80
168
7
61
3
42
8.71
121.94
8
186
8
63
28
7.87
110.18
12
190
9.
64
1
14
7.11
99.55
24
180
10
62
-2
-28
6.2
86.8
XX
128
17:58
w
25°C
G x 4) ENG
11-03-2022
近
Transcribed Image Text:A 10e_11_Chap_Student_Workbook.pdf - Adobe Acrobat Reader DC (64-bit) Archivo Edición Ver Firmar Ventana Ayuda / 27 5. Columns 1–8 in your table should look like this: (1) (2) (3) (4) (5) (6) (7) (8) Marginal Product Marginal Revenue Product Average Revenue Product Units of Average Product Marginal Cost Profit when Labor Output TFC = $500 XX XX XX XX XX -500 1 8 8 112 8 112 3 -412 2 20 12 168 10 140 2 -268 3 34 14 196 11.33 158.62 1.71 -96 4 45 11 154 11.25 157.5 2.18 34 53 8 112 10.6 148.4 3 122 58 70 9.67 135.38 4.80 168 7 61 3 42 8.71 121.94 8 186 8 63 28 7.87 110.18 12 190 9. 64 1 14 7.11 99.55 24 180 10 62 -2 -28 6.2 86.8 XX 128 17:58 w 25°C G x 4) ENG 11-03-2022 近
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