ECON 1B03 Lecture Notes - Lecture 12: Marginal Revenue, Demand Curve, Perfect Competition

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31 Mar 2016

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ECON 1B03 Full Course Notes

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The markets for the factors of production (resources) If output is sold where p = mr, then mrp = p. If a worker adds 50 units to total output which sell for each, she adds to tr. Mrp diminishes because mp diminishes when there are fixed inputs. The cost of the worker is her wage, w. To maximize profit, firms hire workers where. A change in w: a movement along the labour demand curve. Since d = mrp = p * mp(l) if price increases, demand increases, shifts right if price decreases, demand decreases, shifts left: 2. Changes in supply of other factors (cid:1) (cid:1) (cid:1) if something changes the mp(l), the curve will shift. Advances that increase the mp(l), they"ll shift the demand curve to the right. We don"t mean advances meant to replace labour. The opportunity cost of leisure is an hours" wage.

Related Questions

Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).

Workers	Total Product (TP)	Average Product (AP)	Marginal Product (MP)	Marginal Revenue Product (MRP)
0	0	-	-	-
1	10
2		15
3			40
4		35
5	190
6			30
7	240
8	250
9			5

a) Fill in the missing numbers for the TP, AP, and MP columns (round to the nearest chair)

b) In one sentence explain what the AP of 4 workers being 35 tells us.

c) In one sentence explain what your answer for MP of the 4^th worker tells us.

d) Given the fact that each chair produced in our factory can be sold at the market price of $10 per chair, fill in the MRP column (round to the nearest dollar).

e) In one sentence explain what your answer for MRP for the 4^th worker tells us.

f) If the market wage for workers doing manufacturing work (such as chair production) is $180 per day, determine the amount of workers this firm should hire to maximize its profit.

Explain your answer using MRP.

lavenderreindeer626

Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).

Workers	Total Product (TP)	Average Product (AP)	Marginal Product (MP)	Marginal Revenue Product (MRP)
0	0	-	-	-
1	10
2		15
3			40
4		35
5	190
6			30
7	240
8	250
9			5

a) Fill in the missing numbers for the TP, AP and MP columns (round to the nearest chair)

b) In one sentence explain what the AP of 4 workers being 35 tells us.

c) In one sentence explain what your answer for MP of the 4^th worker tells us.

d) Given the fact that each chair produced in our factory can be sold at the market price of $10 per chair, fill in the MRP column (round to the nearest dollar).

e) In one sentence explain what your answer for MRP for the 4^th worker tells us.

f) If the market wage for workers doing manufacturing work (such as chair production) is $180 per day, determine the number of workers this firm should hire to maximize its profit.

Explain your answer using MRP.

copperbee33

1. Which of the following is characteristic of the marginal revenue product schedule for a resource?

a. It approximates the firm's demand curve for the resource.

b. It measures the change in total revenue resulting from employing an additional unit of the resource.

c. It is determined by multiplying the marginal product of the resource by the marginal revenue of the good produced.

d. All of these are true.

2. Assume Ajax Company employs 100 workers and the total revenue is $400,000 per week. When Ajax Company employs 101 workers, the total revenue is $405,000. The marginal revenue product of the 101st worker is:

a. $40,000.

b. $5,000.

c. $405,000.

d. none of these.

3. The optimal number of workers to be hired by a firm operating in a competitive labour market is where:

a. P = MRP.

b. MP = MRP.

c. MRP = w.

d. P = w.

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ECON 1B03 Lecture Notes - Lecture 12: Marginal Revenue, Demand Curve, Perfect Competition

ECON 1B03 Full Course Notes

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