ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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A company operates in a perfectly competitive market, selling each unit of output for a price of $20 and paying the market wage (marginal resource
cost) of $270 per day for each worker it hires.
In the following table, complete the column for the marginal revenue product of labour (MRP) at each quantity of workers.
Labour
Output
Marginal Product of Labour
(Number of workers) (Units of output) (Units of output)
Marginal Revenue Product of Labour
(Dollars)
0
1
2
3
4
5
0
20
39
57
72
84
20
19
18
15
12
On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show
the wage rate. Line segments will automatically connect the points.
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Transcribed Image Text:A company operates in a perfectly competitive market, selling each unit of output for a price of $20 and paying the market wage (marginal resource cost) of $270 per day for each worker it hires. In the following table, complete the column for the marginal revenue product of labour (MRP) at each quantity of workers. Labour Output Marginal Product of Labour (Number of workers) (Units of output) (Units of output) Marginal Revenue Product of Labour (Dollars) 0 1 2 3 4 5 0 20 39 57 72 84 20 19 18 15 12 On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show the wage rate. Line segments will automatically connect the points.
On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show
the wage rate. Line segments will automatically connect the points.
Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the marginal
revenue product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1.
?
WAGE (Dollars per worker)
400
380
320
280
240
200
160
120
80
40
0
0
1
2
3
LABOUR (Number of workers)
The profit-maximizing quantity of labour at the market wage is
5
Demand
Wage Rate (or Market Resource Cost)
expand button
Transcribed Image Text:On the following graph, use the blue points (circle symbol) to plot the firm's labour demand curve. Then, use the orange line (square symbol) to show the wage rate. Line segments will automatically connect the points. Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the marginal revenue product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. ? WAGE (Dollars per worker) 400 380 320 280 240 200 160 120 80 40 0 0 1 2 3 LABOUR (Number of workers) The profit-maximizing quantity of labour at the market wage is 5 Demand Wage Rate (or Market Resource Cost)
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