Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 11, Problem 7SQ
To determine
The maximum hiring decision of a firm.
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Part a. What is the marginal physical product(MPP) of the third unit of labor hired?
Part b. What is the marginal revenue product(MRP) of the fourth unit of labor hired?
Part c. If the labor market equilibrium wage(W*) were $9 per hour, how many workers would a firm wish to hire? Why?
At the bottom of the page, complete the labor demand table for a fifirm that is hiring labor competitively and selling its product in a competitive market.a. How many workers will the firm hire if the market wage rate is $27.95? $19.95? Explain why the firm will not hire a larger or smaller number of units of labor at each of these wage rates.b. Show in schedule form and graphically the labor demand curve of this firm.c. Now again determine the firm’s demand curve for labor, assuming that it is selling in an imperfectly competitive market and that, although it can sell 17 units at $2.20 per unit, it must lower product price by 5 cents in order to sell the marginal product of each successive labor unit. Compare this demand curve with that derived in question 2b (part b of this question). Which curve is more elastic? Explain.
CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers in a perfectly competitive labor market.
a. Draw side-by-side graphs for the labor market and for CleanIt and show each of the following.
i. the market wage, labeled Wm and the quantity of workers hired in the market, labeled Lm
ii. the marginal factor (resource) cost curve, labeled MFC
iii. the marginal revenue product curve, labeled MRP
iv. the wage paid by the firm, labeled Wf and the quantity of workers hired by the firm labeled Lf
b. Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of CleanIt's workers.
i. in the short run, will the wage paid by CleanIt be higher then, lower than, or equal to Wf? Explain.
ii. in the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same? Explain.
c. CleanIt uses capital in the form of trucks, which it rents for $10,000 each. The marginal…
Chapter 11 Solutions
Micro Economics For Today
Ch. 11.3 - Prob. 1YTECh. 11 - Prob. 1SQPCh. 11 - Prob. 2SQPCh. 11 - Prob. 3SQPCh. 11 - Prob. 4SQPCh. 11 - Prob. 5SQPCh. 11 - Prob. 6SQPCh. 11 - Prob. 7SQPCh. 11 - Prob. 8SQPCh. 11 - Prob. 9SQP
Ch. 11 - Prob. 10SQPCh. 11 - Prob. 11SQPCh. 11 - Prob. 1SQCh. 11 - Prob. 2SQCh. 11 - Prob. 3SQCh. 11 - Prob. 4SQCh. 11 - Prob. 5SQCh. 11 - Prob. 6SQCh. 11 - Prob. 7SQCh. 11 - Prob. 8SQCh. 11 - Prob. 9SQCh. 11 - Prob. 10SQCh. 11 - Prob. 11SQCh. 11 - Prob. 12SQCh. 11 - Prob. 13SQCh. 11 - Prob. 14SQCh. 11 - Prob. 15SQCh. 11 - Prob. 16SQCh. 11 - Prob. 17SQCh. 11 - Prob. 18SQCh. 11 - Prob. 19SQCh. 11 - Prob. 20SQ
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- What is the marginal cost of labor for a firm that operates in a competitive labor market? How does this compare with the MCL for a monopsony?arrow_forwardAre unions and technological improvements complementary? Why or why not?arrow_forwardTable 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and the price at which the film can sell output in the perfectly competitive market where it operates. What is the value of the marginal product at each level of labor? If the firm operates in a perfectly competitive labor market where the going market wage is 12, what is the films profit maximizing level of employment?arrow_forward
- In the market for labor ______ purchase labor from ________. Firms, individuals Individuals, firms Unions, individuals Monopsonies, firmsarrow_forwardFor each of the following determine the impact on the demand or the supply of labor and effect on the equilibrium wage and quantity of labor employed. 1. The marginal productivity of workers rises.2. The government has just adopted an open-door immigration policy3. People desire leisure more than ever beforearrow_forward1. Carolyn owns a soda factory and hires workers in a competitive labor market to bottle the soda. Her company's weekly output of bottled soda varies with the number of workers hired, as shown in the following table. a. If each case sells for $10 more than the cost of materials and wages are $1000 per week, how many workers will be hired? b. Suppose a bottlers union now sets weekly wages at $1,500 and all the workers belong to the union. How many workers will be hired instead? 0 1 2 3 4 5 c. If the price per case rises so that each one sells for $15, will Carolyn hire more workers under union conditions? Number of Workers Cases 0 200 360 480 560 600 per weekarrow_forward
- Carolyn owns a soda factory and hires workers in a competitive labor market to bottle soda. Her company's weekly output a bottle soda varies with the number of workers hired, as shown in the following table. Complete the following table before answering: Number Of Workers Cases Per Week Total Revenue $ per week VMP $ per worker 0 0 1 200 2 360 3 480 4 560 5 600 A. If each case sells for $10 more than the cost of the materials used in producing it in the competitive market wage is $1000 per week how many workers should Carolyn hire? How many cases will be produced per week?…arrow_forward16. Bob White argues that if his wage went up from $10/hour to $20/hour he would still be able to pay rent and feed his family even if he worked half as many hours. So, if his wage increased he would want to work less. What is strange about Bob White's labor supply curve? a. it is very elastic b. it is very inelastic c. it slopes down d. it is verticalarrow_forwardFor each of the following determine the impact on the demand or the supply of labor and the effect on the equilibrium wage and quantity of labor employed. a. An increase in the price of capital. b. A union is formed which uses collective bargaining to obtain higher wages for its members. c. The marginal productivity of workers rises. d. People desire leisure more than ever before (e.g. it is Christmas Day). e. The wages offered in other labor markets requiring similar skills are now offering substantially higher wages. f. The fringe (non-monetary) benefits offered in this market have increased substantially. g. The government has just adopted an "open-door' immigration policy?arrow_forward
- The following table shows the total output each week of workers on a perfectly competitive cherry farm. The equilibrium price of a pound of cherries is $4. Complete the Marginal Product of Labor and the Marginal Revenue Product of Labor columns in the table. Then, using the table, answer the following questions. How many workers will the farmer hire if the equilibrium wage rate is: a. $550 per week? b. $650 per week? Quantity of Labor Marginal Product of Labor Value of Marginal Product of Labor Total Output 1 250 250 1000 600 350 1400 3 900 300 1200 4 1,125 1,300 1,450 1,560 225 900 175 700 150 600 7 110 440arrow_forwardLook at the diagram below. Let's assume that aggregate demand declines and a recession occurs, which causes a decrease in the demand for labor. Assuming prices, wages and salaries are sticky, then what is the total excess labor? Salary $45,000 $25,000 5000 11000 19000 Labor S D₁ Doarrow_forwardProblem 08-02 algo Refer to the figure to answer two questions. Marginal Revenue Product(per hour) $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 2 worker(s) MRP b. $10 an hour? 4 worker(s) 6 Quantity of Labor(workers per hour) 8 According to the figure, how many workers would be hired if the prevailing wage were Instructions: Enter your responses as a whole number. a. $14 an hour? 10 12 14arrow_forward
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