Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 25, Problem 13CQ
(a):
To determine
Marginal product and the MRP schedule of the workers.
(b):
To determine
Quantity of workers employed by the firm to maximize the profit.
(c):
To determine
Quantity of workers employed by the firm to maximize the profit with wage of $2,500.
(d):
To determine
Quantity of workers employed by the firm.
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Leisure Times, Inc., employs skilled workers and capital to install hot tubs. The capital includes the tools and equipment workers
use to construct and install the tubs. The installation services are sold in a competitive market for $1,000 per hot tub. Leisure
Times is able to hire workers for $3,500 per month, including the cost of wages, fringe benefits, and employment taxes. The
increase in the number of hot tubs installed as additional workers are hired is indicated in the following table.
Complete the third and fourth columns of the table by computing the marginal product as the number of employed workers changes and the
marginal revenue product for each unit of labor when the competitive price for a hot tub is $1,000.
Number of Workers
Employed
1
2
3
4
10
5
6
7
8
9
Number of Hot Tubs
Installed
5
12
At this new wage, the firm should hire
18
23
27
30
32
33
34
Marginal
Product
If Leisure Times is able to hire workers for $3,500 per month, it should hire
Suppose the wages of skilled…
From 2016 to 2026, the U.S. Bureau of Labor Statistics expects that there will be a fall in demand for
Multiple Choice
occupational therapy assistants.
commercial drivers.
physical therapists.
Saved
word processors and typists.
Calculating the price elasticity of supply
Van is a stay-at-home parent who lives in Chicago and provides math tutoring for extra cash. At a wage of $30 per hour, he is willing to tutor 6 hours per week. At $50 per hour, he is willing to tutor 16 hours per week.
Using the midpoint method, the elasticity of Van’s labor supply between the wages of $30 and $50 per hour is approximately (0.05 / 0.55 / 1.82 / 22), which means that Van’s supply of labor over this wage range is ( elastic / inelastic).
Chapter 25 Solutions
Economics: Private and Public Choice (MindTap Course List)
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