Suppose a firm in a competitive industry faces an equilibrium product price of $2 per unit of output. Table A provides information on the output produced by various amounts of labor. Use this information to complete the remaining columns of Table A, and to fill in the labor demand schedule in Table B.
Table A: Production Schedule Units of Labor Total Product
Units of Labor
Total Product
AP
MP
MRP
0
0
1
13
2
25
3
34
4
42
5
46
6
48
(a) Complete Table A, where AP is the average product of labor, MP is the marginal product of labor, MRP is the marginal revenue product of labor.
(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market
Wage Rate
Quantity Demanded
24
16
8
(c) Complete Table B, with the labor demand schedule for this firm at different wage rates.
(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?
Suppose a firm in a competitive industry faces an equilibrium product price of $2 per unit of output. Table A provides information on the output produced by various amounts of labor. Use this information to complete the remaining columns of Table A, and to fill in the labor demand schedule in Table B.
Table A: Production Schedule Units of Labor Total Product
| Units of Labor | Total Product | AP | MP | MRP |
| 0 | 0 | |||
| 1 | 13 | |||
| 2 | 25 | |||
| 3 | 34 | |||
| 4 | 42 | |||
| 5 | 46 | |||
| 6 | 48 |
(a) Complete Table A, where AP is the average product of labor, MP is the marginal product of labor, MRP is the marginal revenue product of labor.
(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market
| Wage Rate | Quantity Demanded |
| 24 | |
| 16 | |
| 8 |
(c) Complete Table B, with the labor demand schedule for this firm at different wage rates.
(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?
Related textbook solutions
Related questions
A purely competitive firm faces the marginal product schedule shown in the table below. The price of the product is $25 and the wage rate is $300 per worker.
Calculate the marginal revenue product and complete the table. (Enter your responses as whole numbers.)
|
Workers |
Marginal Product (MP) |
Marginal Revenue Product (MRP) |
|
10 |
2424 |
$ |
|
11 |
2020 |
?? |
|
12 |
1616 |
?? |
|
13 |
1212 |
?? |
|
14 |
88 |
?? |
|
15 |
44 |
?? |
The firm should hire
A. 14 workers
B. 11 workers
C. 13 workers
D. 15 workers
Which of the events below will cause an increase in the marginal revenue product of labor?
a. an increase in the marginal product of labor
b. an increase in the price of the final good
c. a technology improvement
d. all of the above
Consider the table above. What is the marginal revenue product of the 5th worker
a. $10 b. $20 c. $4 d. $6
|
