Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 9P
a)
To determine
The number of push mowers will rent and the number of workers will be hired by Person A.
b)
To determine
The number of riding movers and the number of workers needs to cut 400 lawns per week.
c)
To determine
The number of workers hired, the equipment used for cutting lawns, and the available amount of profit.
d)
To determine
The effect of payroll tax.
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Ann owns a lawn-mowing company. She has 400 lawns she needs to cut each week. Her weekly revenue from these 400 lawns is $20,000. Given an 18-inch-deck push mower, a laborer can cut each lawn in two hours. Given a 60-inch-deck riding mower, a laborer can cut each lawn in 30 minutes. Labor is supplied inelastically at $5.00 per hour. Each laborer works eight hours a day and five days each week.a. If Ann decides to have her workers use push mowers, how many push mowers will Ann rent and how many workers will she hire?b. If she decides to have her workers use riding mowers, how many riding mowers will Ann rent and how many workers will she hire?c. Suppose the weekly rental cost (including gas and maintenance) for each push mower is $250 and for each riding mower is $1,800. What equipment will Ann rent? How many workers will she employ? How much profit will she earn?d. Suppose the government imposes a 20 percent payroll tax (paid by employers) on all labor and offers a 20 percent subsidy…
1. Computing labor productivity and its relationship to the demandfor labor
Sizzler's produces charcoal grills in a small manufacturing facility and sells the grills in a competitive market. The following table presents the
company's production function:
Labor
(Number of workers)
0
OUTPUT (Grills)
400
360
320
280
Use the blue points (circle symbol) to plot the production function for Sizzler's on the following graph.
240
200
160
120
80
40
0
1
0
2
3
4
5
1
Output
(Grills)
0
95
185
260
320
355
2
3
LABOR (Number of workers)
4
5
Production Function
(?)
Calculate the marginal product of labor (MPL) of each worker, and then plot the MPL curve on the following graph using the blue points (circle
symbol).
11. Calculating the price elasticity of supply
Dina is a stay-at-home parent who lives in Denver and does some consulting work for extra cash. At a wage of $25 per hour, she is willing to work 6
hours per week. At $35 per hour, she is willing to work 16 hours per week.
Using the midpoint method, the elasticity of Dina's labor supply between the wages of $25 and $35 per hour is approximately
that Dina's supply of labor over this wage range is
which means
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