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 25, Problem 4RQ
Sub Part (a):
To determine
Technology and capital stock.
Sub part (b):
To determine
Equilibrium wage rate.
Sub part (c):
To determine
Migration of labor that bring equilibrium wage equal in both the country.
Sub part (d):
To determine
Calculation of domestic output.
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Ian works at an iron smelter in Pittsburgh, the center of iron
production in America. Due to the difficulty in measuring
the productivity of individual employees, Ian's employer as
well as the other iron smelters all pay an efficiency wage.
Adjust the wage line on the graph to reflect this situation.
What characteristic of efficiency-wage jobs is not
supported by the situation shown in the graph?
The wage rate will eventually return to the
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Efficiency wages result in an increase in the rate
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Wage ($ per hour)
Wage
Quantity of workers (in thousands)
S
O
Q49
In order to maximize profits, a firm needs to determine the quantity of each factor that it will employ, which is dictated by price as well as productivity of the factor. Assume farmer in the Ottawa area named Justin Trudeau has fixed amounts of land and capital finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired. The farmer's product sells for $3 per unit, and the wage rate is $13 per worker. The marginal revenue product of the second worker is
Multiple Choice
$9
$15
$24
$8
$14.
12
120
160
200
240
280
Units of labor (millions of workers)
Refer to Figure above and find the following
of labor equal to
1) At wage rate $3, there is a
million people.
2) The productivity of workers decreases. If the equilibrium wage rate
change from
3) If this firm pays the efficient wage of $12.
to
?
www
Wage rate ($)
3.
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