LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 11, Problem 1P
To determine
Identify how the workers sort themselves across firms, if the output reduces.
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Students have asked these similar questions
Consider the Labor Economics Question. This will provide insight into the idea of the optimal number of workers and the value of the marginal product of labor.
If wages in the restaurant is $16.80 per hour and the price of a Hamburger is $8.30 and the production function for the workers is:
Q = 11L – 0.25L2
How many workers should Your Restaurant employ during the lunch hour to maximize profits? 1 Point
(note—the value of the marginal product of labor and the marginal revenue product are the same)
We maximize profits which are total revenues less total costs:
Suppose there are 100 workers in an economy with two firms. All workers are worth $35 per hour to firm A but differ in their productivity at firm B. Worker 1 has a value of marginal product of $1 per hour at firm B, worker 2 has a value of marginal product of $2 per hour at firm B, and so on. Firm A pays its workers a time-rate of $35 per hour, while firm B pays its workers a piece rate. How will the workers sort themselves across firms? Suppose a decrease in demand for both firms’ output reduces the value of every worker to either firm by half. How will workers now sort themselves across firms?
A country can produce two goods, X and Y. The maximum possible output
of X is 200 and the maximum possible output of Y is 300. If the marginal
product of labor in X is 4, what is the marginal product of labor in Y?
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