An economy operates with firms that have the Cobb-Douglas production function Y = 2K 0.4L0.6 - The capital and labor inputs are perfectly competitive. The production market is competitive so firms have zero economic profit. Firms use 1,500 units of capital. Labors form union so that firms have to increase the real wage from $10 per hour to $12 per hour. Then, the labor demand decreases by... 35.5% 36.6% 57.7% 74.7%

An economy operates with firms that have the Cobb-Douglas production function Y = 2K 0.4L0.6 - The capital and labor inputs are perfectly competitive. The production market is competitive so firms have zero economic profit. Firms use 1,500 units of capital. Labors form union so that firms have to increase the real wage from $10 per hour to $12 per hour. Then, the labor demand decreases by... 35.5% 36.6% 57.7% 74.7%

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 3PA

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Similar questions

What determines the demand for labor for a firm operation in a perfectly competitive out market?
The following table shows the production function for a company. This company sells its product in a perfectly competitive product market at a price of $4 each and hire labor in a perfectly competitive labor market at a wage of $450 per week. Calculate the Marginal MarginalProduct of the 1st, 2nd, and 3rd. Calculate the Value ofMarginal Product of the 1st, 2nd, and 3rd How many workers should it hire? How do you know? Explain your answer. Show formulas and some of your calculations.
Questions 16.6-16.10: In the table, L is the units of labor, TP, is the total product of labor, MP is the marginal product of labor, TR is total revenue, and MRP. is the marginal revenue product of labor. Assume the other quantities employed by the firm remain constant. Answer these in order. That is, do not answer 16.7 before 16.6 is answered. ТР MPL Price TR MRP. $1000 1. 10 1000 2 18 1000 3. 24 1000 4 28 1000 16.6. Compute the MPL 1000 30 16.7. Compute TR. 16.8. Compute MRP.
Given the following production function. If the price of the output is $100. What is the Marginal Revenue Product of the 4th worker (4th unit of labor)? Units of Labor Total Output MP ㅇ ㅇ 1 5 2 15 3 30 4 42 5 52 60 7 65 8. 67 9 63 10 55
Suppose you are considering hiring another worker. Also assume that you are at a firm that is operating at a point where the marginal product of labor is 5 and the price of each unit of labor is $2, and the marginal product of capital is 20 and the price of each unit of capital is $10. Should you hire another worker? If you hire another worker, what will happen to the marginal product of labor and why?
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