LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 7P
To determine
Identify which firm will pay the greatest efficiency wage as well as the smallest efficiency wage.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that Zamboni Enterprises is the only company that sells zambonis (ice resurfacing machines). To produce the machines, the company hires assembly workers. Since these workers can work in many different companies, Zamboni Enterprises must pay them the market wage, which is equal to $6. The number of zambonis that the company produces, which is denoted by y, is proportional to the number of assembly workers that it hires, which are denoted by N; in particular, the production function is given by y=0.76N. The economywide demand for zambonis is given by the following demand function: y=2191-219p, where y is the number of zambonis that consumers are willing to purchase at price p.
Given this market structure, how many assembly workers will Zamboni Enterprises choose to hire?
How many zambonis will Zamboni Enterprises produce and sell?
Suppose that Zamboni Enterprises is the only company that sells zambonis (ice resurfacing machines). To produce the machines, the company hires assembly workers. Since these workers can work in many different companies, Zamboni Enterprises must pay them the market wage, which is equal to $6. The number of zambonis that the company produces, which is denoted by y, is proportional to the number of assembly workers that it hires, which are denoted by N; in particular, the production function is given by y=0.76N. The economywide demand for zambonis is given by the following demand function: y=2191-219p, where y is the number of zambonis that consumers are willing to purchase at price p.
Given this market structure, how many assembly workers will Zamboni Enterprises choose to hire?
How many zambonis will Zamboni Enterprises produce and sell?
What will be the price of a zamboni?
If the market for zambonis were competitive, how many zambonis would be produced?
If the market for…
Suppose that Zamboni Enterprises is the only company that sells zambonis (ice resurfacing machines). To produce the machines, the company hires assembly workers. Since these workers can work in many different companies, Zamboni Enterprises must pay them the market wage, which is equal to $6. The number of zambonis that the company produces, which is denoted by y, is proportional to the number of assembly workers that it hires, which are denoted by N; in particular, the production function is given by y=0.76N. The economywide demand for zambonis is given by the following demand function: y=2191-219p, where y is the number of zambonis that consumers are willing to purchase at price p.
If the market for zambonis were competitive, how many zambonis would be produced?
If the market for zambonis were competitive, how many assembly workers would be hired?
If the market for zambonis were competitive, at what price would zambonis be sold?
Knowledge Booster
Similar questions
- A cleaning company specializes in cleaning floors. Their output is measured in square feet of floor completely cleaned. Employee A can clean 215 ft2 floor per hour and has an hourly wage of $17. Employee B can clean 180 ft2 floor per hour and has an hourly wage of $15. Which employee has a lower marginal cost of producing cleaned floor area for the firm? Group of answer choices a. Cannot determine with the information given b. Employee A c. they have the same MC d. Employee Barrow_forwardA housecleaning company receives $25 for each house cleaned. The table below gives the relation between the number of workers and the number of houses that can be cleaned per week. Number of Workers Houses Cleaned 1 9 2 17 3 24 4 30 5 35 Based on the information in the table, if the company want to maximize profit and hires three workers, the wage rate of a housecleaner can be no more thanarrow_forwardAssume a firm incurs overall labor costs of $22 per hour- which includes wages and training costs. Unit training costs equals $160/h and the wage equals $20/h. How many firms are there?arrow_forward
- A meeting of representatives for labor and management to negotiate contracts is calledarrow_forwardAlec and Ellie are the only detectives in the town of Broadchurch. Assume efficient production. Each has 73 hours a week to allocate between conducting interviews and completing paperwork. They work independently and do not trade any jobs. Right now they each spend half their time completing paperwork and half their time conducting interviews. Alec takes 31 hours to complete one interview or 3 hours to complete one file of paperwork. Ellie takes 13 hours to complete one interview or 19 hours to complete one file of paperwork. A trade is proposed between Alec and Ellie at the following price: 1 interview for 2.3 files of paperwork. If they trade at this price, they will fully specialize. At this price, what is the total number of interviews conducted in Broadchurch in a week? Enter a number only.arrow_forwardAt $300 per day what is the maximum number of mechanics Craig should hire?arrow_forward
- A firm is thinking of hiring an additional worker to their organization who can increase total productivity by 100 units a week. The cost of hiring him is $1,500 per week. If the price of each unit is $12, which of the following is correct? Group of answer choices the MR of hiring the worker is $1,500. The MC of hiring the worker is $1,200. The worker should be hired at that wage because the marginal benefit exceeds the marginal cost. All of the above are correct. None of the above is correct.arrow_forwardFirm T produces 600 tires at a cost of $30 each, and sells all 600 tires to Firm B at a cost of $35 each. Firm F produces 300 bicycle frames at a cost of $200 each, and sells all 300 frames to Firm B for $225 each. Firm B produces 300 bicycles at a cost of $500 each. Firm B sells 280 bicycles to consumers for $600 each. They do not sell the remaining bicycles. In each blank, enter a whole number with no commas and no dollar sign. In this simple economy the value of consumption spending is $ and the value of investment spending is $arrow_forwardTwo firms compete for hiring workers in the labour market.The equilibrium wage is w = alpha + beta(H1 + H2), where alpha, beta; > 0 are parameters,and Hi is the number of workers hired by firm i = 1; 2. Firm i's profit is(y - w) Hi, where y is the output per worker. Assume y > alpha . Firm i choosesHi to maximize its profit. Do the following: (a) Consider the two firms decideon Hi simultaneously. Derive the Nash equilibrium. (b) Consider the twofirms make decisions sequentially. Firm 1 gets to hire first, followed by firm2. Derive the subgame perfect equilibriumarrow_forward
- What is the principal-agent problem? Have you ever worked in a setting where this problem has arisen? If so, do you think increased monitoring would have eliminated the problem? Why don’t firms simply hire more supervisors to eliminate shirking?arrow_forwardBabel, an architectural firm, is aspiring to build the world's largest tower. They need to determine how many workers to hire to maximize efficiency and output.arrow_forwardGoleta Brewing Company hires only two types of labor, managers and brewing assistants (denoted M and B, respectively). GBC has the following Cobb-Douglas production function F(M,B) = M.5 B.5 and wants to produce 10 barrels of pale ale this week. If the wage of managers is $50 per hour and the wage of brewing assistants is $10 per hour, how many managers and brewing assistants should the firm hire (round to nearest whole number)? How does your answer change when the wage of managers decreases to $30 per hour and the wage of brewing assistants remains constant. Is this result consistent with your intuition?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning