ESSENTIALS OF ECONOMICS
11th Edition
ISBN: 9781260225334
Author: SCHILLER
Publisher: RENT MCG
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Question
Chapter 5, Problem 8P
To determine
The Marginal Physical Product of the fifth worker as mentioned in the given figure when the investment in the new machinery is made to double the productivity of every worker.
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A firm employs M workers per week and the length of the workweek at the firm is H Let MPM be the added output from an additional employee and let MPH be the added output from a one hour increase in the workweek at the firm. MEM and MEH are, respectively, the marginal expense of an added worker and of an added hour of work. At present, the cost of an added unit of output produced by hiring more workers is $5 while the cost of an added unit of output produced by employing existing workers for more hours is $3. Is the firm maximizing profits given its current employment level and workweek? If your answer is yes, explain why. If your answer is no, explain why not and discuss what adjustments the firm should make.
It's a general question. There's no given output being produced by added workers and additional hours.
You observe that MPL > APL and MPL is decreasing but positive as more labor input is used.
Output must be
rate and average productivity 'APL' must be
at
increasing
decreasing
Kevin, a worker in Volcania, can produce 182 baskets of Peaches in a(n) 11-hour shift. Calculate Kevin's labor productivity.
basket/hour
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- Give typing answer with explanation and conclusion Production function Y=8*K^.33*L^.66 Now what if there is skill biased technological change that makes capital more productive relative to labor such that alpha or the exponent on K rises to .5 and the exponent on L falls to .5 By what % does real wage change? By what % does R/P change?arrow_forwardTechnological progress decreases the marginal product of labor if a new input is developed that is complementary with labor. True Falsearrow_forwardAssume that Economyland’s production function is Y = F (K, L) = K 0.5 L 0.5Where Y is output level, K is the amount of capital input, and L is the amount of laborinput. a) What is the per-worker production function, y= f (k) for Economyland? b) Assume that 10 percent of capital depreciates each year and savings rate is 20 percent,find the steady-state level of capital per worker for Economyland. Then find the steady-state levelof income per worker and steady-state level of consumption per worker. c) Is it possible to save too much? Why?arrow_forward
- Question1 Imagine you work for a firm that only utilizes labor and capital as inputs and has a CES production function: q = f(L, K) = [aLº + BK²] = Where a = 3 = 0.5.y 1.p = 0.5. a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this CES function have constant, increasing, or decreasing returns to scale?arrow_forwardWhat is the real average hourly earnings for 1965 in 2010 dollars equal to?arrow_forwardExplain how intertemporal substitution is important for current labour supply and for the current demand for consumption goods.arrow_forward
- Suppose that the production function takes on the following form: Q = E3K If Capital is equal to 64, the price of output is p, r is the price of capital, and w is the wage rate, then determine the short run demand function for labor. How does Autor (2015) characterize the types of jobs that are most vulnerable to being made obsolete by automation? In the Autor (2015) article, what are the three main factors that augments or mitigates the effects of technological change.arrow_forwardSuppose that a person's life is divided into two periods. A period of poor economic times, when this person earns $27 per hour of work, and a period of good economic times when they earn $39 per hour. The person cannot work more than 2000 hours in a single period, but they want to earn $104,000 total across both periods. What is the minimum number of hours this person needs to work total? Round your answer to two decimal places. Then take a second and thing about what is happening to GDP in each time period and connect the dots to Real Business Cycle Theory.arrow_forwardRocky Gap Furniture hires eight employees working eight hours each to produce 176 rocking chairs. What is the productivity of these workers? 1.5 chairs per hour 22 chairs per hour 2.75 chairs per hour 88 chairsarrow_forward
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