Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 6, Problem 2P
(a)
To determine
Change in Marginal product (MP) due to the increased number of workers in short run.
(b)
To determine
Changes in output in the long run.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A garment factory’s production function is provided in the table.The gross profit per unit (difference between selling price and material cost, but not including the cost of labour) is $100.
# Workers
Output
1
20
2
36
3
48
4
56
5
60
6
62
(i) If the wage rate is $1,000 a week, how many workers should the factory hire?
(ii) If a surge in popularity for the factory’s brand allows them to raise the product price such that the gross profit rises to $150, how many workers will the factory hire now?
(iii) Calculate the number of garments produced in each of the two cases above.
In 2002 Boeing reduced employment by 33,000 workers due to reduced demand for aircraft. What does this decision reveal about how it viewed its marginal revenue product (MRP) and marginal resource cost (MRC)? Why didn’t Boeing reduce employment by more than 33,000 workers? By less than 33,000 workers?
A furniture maker currently produces 100 tables per week and sells them for a profit. She is considering expanding her operation in order to make more tables. Should she expand?
Chapter 6 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- The table below shows the short run production function for Corey's Card Store. Number of workers 1 2 3 4 5 6 7 8 Total product per hour 3 7 12 В І 16 19 21 22 20 A. After which worker do diminishing marginal returns begin for Corey's Card Shop? Explain using numbers. B. Assume Corey's Card Shop produces and sells greeting cards in a perfectly competitive market at a unit price of $9. Calculate the marginal revenue product of the 6th worker. Show your work. C. Corey's Card Shop hires labor in a perfectly competitive labor market for clerks at a wage of $25/hour and the market price of greeting cards remains $9. How many workers will Corey's Card Shop hire to maximize its profits? Explain using marginal analysis. D. Assume there is an increase in the demand for greeting cards in the market. What will happen to each of the following? i. The market wage rate. Explain. ii. The marginal revenue product curve for Corey's Card Shop. Explain.arrow_forwardA manufacturer of hospital supplies has a uniform annual demand for 180,000 boxes of bandages. It costs $20 to store one box of bandages for one year and $500 to set up the plant for production. How many times a year should the company produce boxes of bandages in order to minimize the total storage and setup costs? The company should produce boxes of bandages time(s) a year. you ge.. Next R. RAZERarrow_forwardIn 2005 General Motors (GM) announced that it would reduce employment by 30,000 workers. What does this decision reveal about how it viewed its marginal revenue product (MRP) and marginal resource cost (MRC)? Why didn’t GM reduce employment by more than 30,000 workers? By fewer than 30,000 workers?arrow_forward
- Let the hourly production function for Fred's Fountains be the following: 9=K:25,.5 The rental rate of capital, v, is $80 and the wage rate, w, is $40. In the short run, assuming K = 16, answer the following: а. What is the short run total cost function? b. What is the short run supply function? If the price of fountains is $240, to maximize profit, how much labor С. should they use and what is the level of output and profit? d. Given the above situation, Graph R and SC. What about the graph tells you that the second order conditions for profit maximization are satisfied? Is the firm using the right amount of K and L to minimize cost in the е. lorlg run? How do you know? Now calculate the long-run, quantity contingent, input (or factor) demand functions for K and L. At a price of $240 for fountains, how much K and L should they be using? f. g. Now, for the above scenario, what are the long run profit maximizing input demand functions?arrow_forwardConsider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm's capacity. If he adds one more worker, the firm's total monthly revenue will increase from $54,000 to $72,000. If he adds one more tractor, monthly revenue will increase from $54,000 to $66,000. Each additional worker costs $6,000 per month, while an additional tractor would also cost $6,000 per month. Instructions: Enter your answers as a whole number. a. What is the marginal revenue product of labor? The marginal revenue product of capital? $ b. What is the ratio of the marginal revenue product of labor to the price of labor (MRPL/P)? What is the ratio of the marginal revenue product of capital to the price of capital (MRP /P d?arrow_forwardConsider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm's capacity. If he adds one more worker, the firm's total monthly revenue will increase from $52,000 to $70,000. If he adds one more tractor, monthly revenue will increase from $52,000 to $64,000. Each additional worker costs $6,000 per month, while an additional tractor would also cost $6,000 per month. Instructions: Enter your answers as a whole number. a. What is the marginal revenue product of labor? The marginal revenue product of capital? b. What is the ratio of the marginal revenue product of labor to the price of labor (MRP /PL)? What is the ratio of the marginal revenue product of capital to the price of capital (MRP OPd? %24arrow_forward
- A breeder tells you he has determined for each 1-lb increase in weaning weight profit increases by $1.40 per pound. However, he has also calculated that for each independent 1-lb increase in birth weight, profit decreases $5.45 per pound. 1. What would be the economic index for this aggregate breeding value? 2. If the producer gave you the following table with calf birth weight and weaning weight, what would be the index value and rank for these animals? Calf id Weaning weight Birth weight Index value Rank 608 78 589 70 566 80 532 75 5. 556 76 618 87 7. 576 74 8. 610 88 9. 595 90 10 625 73 3 4 6arrow_forwardDanielle decides to withdraw her savings of $70,000 and invest in starting her own clothing business. She normally earns $3,000 in interest from her savings. If Danielle earned an accounting profit of $60,000 last year, what was her economic profit?arrow_forwardWhat would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? please show work!arrow_forward
- Consider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm's capacity. If he adds one more worker, the firm's total monthly revenue will increase from $50,000 to $62,000. If he adds one more tractor, monthly revenue will increase from $50,000 to $68,000. Each additional worker costs $6,000 per month, while an additional tractor would also cost $6,000 per month. Instructions: Enter your answers as a whole number. a. What is the marginal revenue product of labor? The marginal revenue product of capital? b. What is the ratio of the marginal revenue product of labor to the price of labor (MRP ✓ ÷ PL)? What is the ratio of the marginal revenue product of capital to the price of capital (MRP C÷ PC)? c. Is the firm using the least-costly combination of inputs? (Click to select) = d. Does adding an additional worker or adding an additional tractor yield a larger increase in total revenue for each dollar spent? (Click to select)arrow_forwardUse the information about Luther‘s tutoring business to choose the correct answer. Luther owns a tutoring business. In 2017, he decides he needs an economic profit of $70,000 in order to open a new location in 2018. Consider the following information about his business during 2017: He spent $5000 on new computer software for mathematics. (The software depreciates at 10% per year) He spent $15,000 in wages. He made $80,000 in total revenue. He spent $3000 paying bills. He paid $2000 interest on a loan. Which expense is an implicit expense? - computer software depreciation - wages - billsarrow_forwardIf new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market? Include a detailed set of graphs showing both the market and firm long run equilibration in reaction to the change. (Use of ai bot IS strictly prohibited. )arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc