Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 18, Problem 1QR
To determine
To determine: How the production function is related to marginal productivity of labor.
Expert Solution & Answer
Explanation of Solution
The production function represents the relationship between the quantity of factors of production and the total quantity output produced. Labor is one of the important factors of production. If the marginal factors of production increase, the total quantity of production also increases. That is, the changes in marginal product of labor directly affect the production function. The value of marginal product of labor is equal to the wage rate. Thus, the relationship between the value of marginal product of labor and
Economics Concept Introduction
Concept introduction:
Production function: Aproduction function shows the relationship between quantity of input and quantity of output used during the production process.
Marginal product of labor: Marginal product of labor refers to an additional product to the total product due to a change in one unit of labor.
Value of marginal product of labor: Value of marginal product of labor is the monetary value of the marginal product of labor.
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Students have asked these similar questions
Explain how a firm’s production function is related toits marginal product of labor, how a firm’s marginalproduct of labor is related to the value of its marginalproduct, and how a firm’s value of marginal productis related to its demand for labor
Suppose a firm finds that the marginal product of capital is 60 and the marginal product of labor is 20. If the price of capital is $6 and the price of labor is $2.50, describe how the firm should adjust its mix of capital and labor? What will be the result?
A firm's production function is:
q = 20L1/2K1/2
where q is the firm's total product, L is the quantity of labor employed, and K is the quantity of capital employed. The price of labor is $25 per unit and the price of capital is $100 per unit.
a. What is the equation for the marginal product of labor?
b. What is the equation for the marginal product of capital?
c. Given the price of labor is $25 per unit and the price of capital is $100 per unit, what is the cost-minimizing combination of capital and labor that can produce 800 units of output?
Chapter 18 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- Barb's Bakery employs three workers who produce 6 cakes per hour. After Barb hires a fourth worker, production increases to 12 cake per hour. Which of the following statements is TRUE? a. b. C. d. Because the marginal product of the fourth worker is greater than the average product of three workers, the average product must rise. Because the marginal product of the fourth worker is less than the average product of three workers, the average product must fall Because the marginal product of the fourth worker is less than the average product of three workers, the average product must rise. Because the marginal product of the fourth worker is greater than the average product of three workers, the average product must fall.arrow_forwardSuppose 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?arrow_forward“After the fifth worker is hired at the hourly wage $40, the output rate increases from 64 pairs of shoes per hour to 72 pairs per hour.” Given the statement, which of the following is correct after the fifth worker is hired? Group of answer choices The marginal cost (MC) becomes $8. The marginal physical product (MPP) per labor hour becomes 5. The marginal cost (MC) becomes $5. The marginal physical product (MPP) per labor hour becomes $40.arrow_forward
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