Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 16, Problem 6RQ
To determine
Profit maximization.
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The table below shows your production function relating output per number of hired workers (assume no changes to the
capital and size of the convenient store.
Use the given information to find the Marginal Product of Labor.
Workers Total Output
0
0
1
2
3
4
LO
5
90
149
182
197
202
Marginal Product
A
OHire a number of workers where marginal product is positive
OHire a number of workers where marginal product is negative
OHire the number of workers where marginal product is maximized
—
←
What should determine the number of workers to hire if your goal is to maximize efficiency?
OHire as many employees as possible
OHire the minimum number of workers
Can a firm have a production function that exhibits increasing returns to scale, constant returns to scale, and decreasing returns to scale as output increases? Discuss.
O A. No. The functional form of the production technology dictates the type of returns to scale it exhibits. While a production function can exhibit both increasing
returns and constant returns to scale at different levels of output, increasing returns and decreasing returns to scale are mutually exclusive.
O B. Yes. At low levels of output, specialization leads to increasing returns to scale. Once specialization has been exhausted, proportional increases in all inputs
lead to constant returns to scale. And finally, for large scale operations, logistical and bureaucratic problems can lead to decreasing returns to scale.
O C. No. The functional form of the production technology dictates the type of returns to scales it exhibits, and there will only be one of the three types of returns to
scale exhibited throughout the…
6.Which of the following are short-run and which are long-run adjustments? LO3
a.Wendy’s builds a new restaurant.
b.Harley-Davidson Corporation hires 200 more production workers.
c.A farmer increases the amount of fertilizer used on his corn crop.
d.An Alcoa aluminum plant adds a third shift of workers.
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Similar questions
- Let's assume that a firm produces 60 products. Its total weekly cost (TC) at this output is $2,100. This includes TVC and TFC. We also know that the firm employs 3 part- time workers at a wage cost of $600 per worker per week. This is the firm's only variable cost (TVC). What is the firm's average fixed cost (AFC) at this output? O $2.50. O $2. O $5. O $100. O $10. Let's assume that a firm's total weekly costs are as follows: 1. Salaries of hired workers $5,000. 2. Supplies = $1,000. 3. Rent = $600, 4. The owners have invested a certain amount of their own money into the business. This could have earned them interest of $200 per week if they had chosen to put it into a bank instead of investing it into their business. 5. The value of the owner's time is estimated to be $800 per week. What are the firm's total economic costs? O $6.000 O $7.600. O $900. $7.500. O $6.700.arrow_forwardRefer to the following table. What is the average product of the 4th worker? Number of Workers 0 1 2 3 4 LO 5 6 Units of Capital 4 units of output LO 5 LO 5 5 5 5 5 LO 5 Group of answer choices 3 units of output 16 units of output 6 units of output Output 0 2 LO 5 9 16 22 23arrow_forwardIf 15 workers produce 100 license plates, 16 workers produce 120 license plates, and 17 workers produce 130-license plates, then O diminishing marginal returns have not set in because the marginal product is positive O the marginal product of the seventeenth worker is 130 O diminishing marginal returns must begin with the sixteenth worker O the marginal product of the sixteenth worker is greater than the marginal product of the seventeenth worker O the marginal product of the fifteenth worker must be 20arrow_forward
- acroeconómic Policy and Natural Resources (10)|| Sp Time left 1:23:57 estion When a par ar firm is fully utilizing its capital, its output is given by Y = 10 × LO5. The cost of labour is OMR1 per unit. To maximize profit, how many units of labour should this firm use? wer saved -ked out of Flag O a. 50 estion O b. 100 О с. 5 O d. 25 O e. 3.16 CLEAR MY CHOICE NEXT PAGE PREVIOUS PAGE CET 0001 A 人 hparrow_forwardGeneral Robotics uses only labour and capital as inputs. Suppose General Robotics' budget for production of gadgets decreased by 20%, causing the company to produce 20% less gadgets. What effect would this development have on this company's demand for labour? O A. 100% scale effect; demand for labour would increase. O B. 100% scale effect; demand for labour would decrease. O C. 100% substitution effect; demand for labour would decrease. O D. 100% substitution effect; demand for labour would increase.arrow_forwardWhich of the following are short-run and which are long-run adjustments? LO9.1 a. Wendy’s builds a new restaurant. b. Harley-Davidson Corporation hires 200 more production workers. c. A farmer increases the amount of fertilizer used on his corn crop. d. An Alcoa aluminum plant adds a third shift of workers.arrow_forward
- What is the Average Total Cost (ATC) for producing 84 units of output? Quantity of Labor 5 7.4 7 7.62 0 1 2 3 4 сл 5 LO 6 Total Output 0 16 40 60 72 80 84 Fixed Cost $160 Variable Cost $80 $160 $240 $320 $400 $480 Total Costarrow_forward1. Suppose that Bill owns a vehicle smash repair shop. The table below shows how the quantity of cars Bill can repair per month depends on the number of workers that he hires. Assume that he pays each worker $4000 per month and his fixed costs are $6000 per month. Using the information provided, complete the table. QUANTITY QUANTITY OF OF CARS PER WORKERS MONTH 0 1 2 3 4 LO 5 0 20 30 40 50 55 FIXED COSTS $6000 VARIABLE COSTS TOTAL COST AVERAGE TOTAL COSTarrow_forwardWhich of the following statements is not correct? Select one: O a When MC is below AVC, AVC is rising. O b. The total product curve shows how a firm's output changes when the quantity of labour changes. O c. Diminishing marginal returns occur when the marginal product of a worker is less than the marginal product of the previous worker. O d. The change in total product resulting from a one-unit increase in the quantity of labour is called marginal product. ous page Nextarrow_forward
- The production function for a widget-manufacturing firm is given by q = 9K0.5L0.5, where q is the number of widgets produced each hour, K is the number of specialized staplers (which is fixed at 4 in the short run), and L is the number of employees. What is the average product of labor at L = 36? O 18 O 9 1.5 3 O none of the abovearrow_forwardSuppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that fixed cost is $130, marginal cost of each worker hired is constant at $40, and the average total cost when three workers are hired is $50. What is the output when three workers are hired? O 20 120 150arrow_forwardIf, by increasing the qulf, by increasing the quantity of labour used by one unit, the firm can give up 2 units of capital and still produce the same output, then the MRTSLK is: antity of labour used by one unit, the firm can give up 2 units of capital and still produce the same output, then the MRTSLK is: O 4 O 1 O 2 O 0.5arrow_forward
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