Chapter 11, Problem 7P

To determine

(a)

The marginal revenue product for each additional unit of labor.

Concept Introduction:

Marginal revenue: This refers to the market value of an additional unit of output.

Demand for labor: This is a concept that defines the amount of demand for labor that an economy or firm is willing to employ at a given point of time.

To determine

(b)

The demand curve for labor is to be constructed.

Concept Introduction:

Marginal revenue: This refers to the market value of an additional unit of output.

Demand for labor: This is a concept that defines the amount of demand for labor that an economy or firm is willing to employ at a given point of time.

To determine

(c)

The amount of labor hired when the wage rate is $15 per hour.

Concept Introduction:

Marginal revenue: This refers to the market value of an additional unit of output.

Demand for labor: This is a concept that defines the amount of demand for labor that an economy or firm is willing to employ at a given point of time.

To determine

(d)

The firm’s total revenue is to be compared with the total amount paid for labor.

Concept Introduction:

Marginal revenue: This refers to the market value of an additional unit of output.

Demand for labor: This is a concept that defines the amount of demand for labor that an economy or firm is willing to employ at a given point of time.

To determine

(e)

The changes in the answers to part b and c with an increase in the price of output to $5 per unit.

Concept Introduction:

Marginal revenue: this refers to the market value of an additional unit of output.

Demand for labor: this is a concept that defines the amount of demand for labor that an economy or firm is willing to employ at a given point of time.