Answered: Suppose that labor is the only input…

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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Question

Suppose that labor is the only input used by a
perfectly competitive firm. The firm’s production
function is as follows:
Days of Labor Units of Output
0 days 0 units
1 7
2 13
3 19
4 25
5 28
6 29
7 29
a. Calculate the marginal product of each additional
worker.
b. Each unit of output sells for $10. Calculate the
value of the marginal product of each worker.
c. Compute the demand schedule showing the
number of workers hired for all wages from zero
to $100 a day.
d. Graph the firm’s labor-demand curve.
e. What happens to this demand curve if the price of
output rises from $10 to $12 per unit?

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