LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 3, Problem 5P
To determine
Explain the changes of employment in a competitive firm that experiences a technological shock.
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What happens to employment in a competitive firm that experiences a technology shock such that at every level of employment its output is 200 units per hour greater than be fore?
You are an employer seeking to fill a vacant position on an assembly line. Are you more concerned with the average product of labor or the marginal product of labor for the last person hired?
a software production firm, average product has started falling and total output indicated diminishing trend. The production manager Mr. Yahya called you and asked you to see the condition of marginal product. You analyzed the situation and reported that marginal product falling more than average product. Mr. Yahya got surprised. In your opinion which situation the firm is heading to?
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- Calculate the Marginal Product (MP) at each input level. If the price of printer is $100 each, calculate the Value of the Marginal of labor (VMPL). If the wage rate (per week) is $1800 , how many workers will be employed? If the firm decides to hire 14 workers, what is the maximum wage the firm would be willing to pay?arrow_forwardSuppose a manufacturing firm currently employs 100 workers and the wage rate is $20 per hour. The firm's production function is given by Q = 10L^(1/2), where Q represents output and L represents the number of workers. Calculate the firm's current MPL .arrow_forwardHow will automation affect the unskilled labor,arrow_forward
- Explain why an increase in the price of an input must typically cause an increase in the long-run total cost of producing any particular level of output.arrow_forwardThe production period during which the firm can alter its use of all inputs is known as the long run short runarrow_forwardHow does any one economic variable respond to changes in another? Why would a profit-maximizing firm expand the use of each input until its marginal revenue product equals the price of the input?arrow_forward
- What stage of production is the increase in output that results from increase in a firm's outputs by some proportion? If the firm is operating efficiently, how can it reduce cost in the short run?arrow_forwardWhat is the difference between the short-run and long-run production periods? Why is it relevant to the economics analysis of firms? If different types of inputs are not as easy to adjust in a certain time period, what difference does this make to the graphs of cost curves for economic analysis?arrow_forwardYou've been hired by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day. The daily wage (per worker) is 100 ETB, and the price of the firm's output is 30 ETB. The cost of other variable inputs is 500 ETB per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You know that the marginal cost of the last unit is 30 ETB. Should the firm continue to operate at a loss? Carefully explain your answer.arrow_forward
- The price of factor A is GHC20 per units and the price of factor B is GHC300.00 per unit. The marginal product of factor A is 40 units and the marginal product of factor B is 60 units. Should the firm increase employment of factor A and decrease employment of factor B to minimise the total long run cost of producing existing output? Explainarrow_forwardWhy does the marginal product of labor start to decrease after a certain number of workers are hired? What makes the difference? a) The variable input continues to increase while the fixed input is fixed. b) Both the variable and the fixed inputs are increasing at the same rate. is it a or b?arrow_forwardExplain why in the medium run an increase in the price of oil will cause an increase in the unemployment rate.arrow_forward
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