Suppose the firm only produces good X and that the price of good Y, a substitutegood, decreases. What will happen to the optimal quantity of labor the firm willhire? Explain.
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good, decreases. What will happen to the optimal quantity of labor the firm will
hire? Explain.
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- A small speciality cookie company, whose only variable input is labor, finds that the average worker can produce 25 cookies per day, the cost of the average worker is $128 per day, an the price of a cookie $0.50. Is the firm maximizing profit? Choose the answer. It is not maximizing profit because... a. the price of the output is not equal to the wage b. the marginal product of labor is less than the wage c. the marginal revenue product of labor is greater than the wage d. the marginal revenue product of labor is less than the wageSuppose that labor is the only input used by a perfectly competitive firm.The firm's production function is as follows:a.Calculate the marginal product for each additional worker.b.Each unit of output sells for $10.Calculate the marginal product for each additional worker.cCompute the demand for schedule showing the number of workers hired.Calculate the Marginal Product (MP) at each input level. If the price of printer is $100 each, calculate the Value of the Marginal of labor (VMPL). If the wage rate (per week) is $1800 , how many workers will be employed? If the firm decides to hire 14 workers, what is the maximum wage the firm would be willing to pay?
- A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit? The firm A. is not maximizing profit because the marginal revenue product of labor is greater than the wage. B. is not maximizing profit because the marginal revenue product of labor is less than the wage. C. is maximizing profit because the marginal product of labor is greater than the wage. D. is not maximizing profit because the price of the output is not equal to the wage. E. is not maximizing profit because the marginal product of labor is greater than the wage.Suppose a beverage company is profit-maximising. It has one factor of production, which is the amount of labour (l) it hires. For each hour of labour, the firm pays a wage 'w'. The production function is given by f(l) = l^1/2.(Assume that the price is equal to 1).a. Suppose that in equilibrium, the wage rate is fixed at w = 7. Solve for the firm’s optimal choice of how much labour to hire.b. Imagine the government votes to increase the minimum wage to w= 10. What happens to employment in the firm?c. Suppose the firm instead chooses to minimise the cost of producing a specific amount of q. Explain how this helps the firm maximise profits.Suppose Fred produces 500 litres of milk every day with 10 workers. The price of milk is $12 per litre, and each worker is paid $550 daily. If the marginal product of the last worker employed is 40 litres of milk, explain whether Fred is maximizing his profit. If not, can Fred increase his profit by employing more or fewer workers? If Fred buys more dairy cattles, how will it affect his demand for labor? Explain with a diagram.
- What is meant by an inferior factor of production? How would the firm’s demand for labour be altered if labour were an inferior factor of production?Using a diagram explain what happens to the long-run demand curve for labor if the price of labour increases? Decompose the changes into scale and substitution effects.“The firm’s demand schedule for labour is a negative function of the wage because, as the firm uses more labour, it has to utilize poorer-quality labour, and hence pays a lower wage.” True or false? Explain.
- Suppose that labor is the only input used by a perfectly competitive firm. The firm’s production function is as follows: Number of Workers: 0, 1, 2, 3, 4, 5, 6, 7 Units of Output: 0, 7, 13, 19, 25, 28, 29, 29 a. Calculate the marginal product for each additional worker. b. Each unit of output sells for $10. Calculate the value of the marginal product of each worker. c. Compute the marginal profit if the wage is $100 a day. 2. Your enterprising uncle opens a sandwich shop that employs 7 people. The employees are paid $12 per hour, and a sandwich sells for $6. If your uncle is maximizing his profit, what is the value of the marginal product of the last worker he hired? What is that worker’s marginal product?Will decrea n he fong run, assume a firm uses both labor and capital to produce 25 units of output. The marginal product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of output, what must be the unit price of capital?Assuming the firm is minimizing its cost and the price of labour is $10 per unit and the price of capital is $20 per unit. the marginal product of labour is 50, what must the marginal product of capital be?
