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olivehamster877Lv1

28 Sep 2019

Fabric, Inc., owns a shoe factory and hires workers in a competitive labor market. The fabric required to make each pair of shoes costs $5. The company's weekly output of finished jeans varies with the number of workers hires, as shown below:

Number of workers Jeans (pairs/week)

0 0

1 25

2 45

3 60

4 72

5 80

6 85

1. If the shoes sell for $35 a pair and the competitive market wage is $250 per week, how many workers should Fabric hire? How many pairs of shoes will the company produce each week?

Complete the Table:

Q labor

TPP

MPP

Price

TRev

MRP/VMP

Labor Cost

Material Cost

Total Cost

MRC

Profit

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Joshua StredderLv10

28 Sep 2019

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Related questions

Assume that the firm only uses labor as a resource in production and is hiring workers in a purely competitive labor market. In other words, the firm can hire as many workers as it wishes without affecting the equilibrium wage rate.

Units of Labor (L)	Total Product (Q)	Product Price (P)	Total Revenue (TR)	Marginal Revenue Product (MRP)
0	0	$2.20	$0	---
1	15	$2.00	$30	$30
2	28	$1.80
3	39	$1.60
4	48	$1.40
5	55	$1.20
6	60	$1.10

a. Is the firm selling its product in a purely competitive market or an imperfectly competitive market?

b. Fill out both the TR and MRP columns with the correct values.

c. Suppose the wage rate is $11.00 per worker. How many workers should be employed, in order to maximize profits?

d. If the firm hires the optimum number of workers, what is its total profit?

lilacmammoth398

Monetary Policy

Go to http://www.tradingeconomics.com/indicators to help find the current values.

1.What are the components of M-1?

2. What is the total value of M-1 for the most recent period? _________________

3. What are the additional components of M-2?

4. What is the total value of M-2 in the most recent period? ___________________

5. Explain in your own words why a decrease in the reserve requirement, say from 10% to 9%, would cause the money supply to increase.

6. Explain in your own words why a decrease in the discount rate from 3% to 2% would cause the money supply to increase.

3. A jeans manufacturer hires workers to sew jeans in its factory and derives the following daily yields of total product, or jeans output (in pairs):

Factory Worker (day)	Total Product (pairs)	Marginal Product	Total Profit	Total Cost	Net Profit	Marginal Revenue	Marginal Cost	Marginal Profit
0	0
1	5	5				$150	$ 90	$ 60
2	15	10				300	90	210
3	20	5				150	90	60
4	23	3				90	90	0
5	24	1				30	90	- 60
6	23	-1				- 30	90	- 120

Assuming the price of jeans is $30 per pair and each worker is paid $90 per day (assume this is the ONLY cost per day) if the jeans manufacturer acts to maximize profit, how many pairs of jeans will be produced?

How many workers will be employed?

What will the jean manufacturer's profit be at this output level?

Why? (State the key condition used in your analysis and show all work in the table above.)

Now assume that each worker's wage drops to $30 per day. What is the new profit-maximizing total output?

How many workers are hired at this level?

Why?

amethystguinea-pig707

(1)

Which of the following employment situations would most closely approximate a monopsony?

	a steel mill in Yokahama, Japan.
	a fast food restaurant in a big city.
	a farmer hiring seasonal workers.
	a large factory in a small town.

(2)

If a monopsonist hires labor, it will choose to hire that quantity at which ___________ and pay a wage rate that is _______________.

	MR = MC; equal to the MRP curve.
	the supply curve intersect the MRP; less than MFC
	MRP = MFC; less than MRP
	the supply curve intersect the MRP; equal to MRP

(3)

Suppose a firm employs both labor and capital. If the ratio of marginal product to price of labor is 50/$10 and the ratio of marginal product of capital to price of capital is 60/$12, the firm should

	maintain the current combination capital and labor.
	buy more labor and less capital because labor is cheaper.
	buy more capital and less labor because capital is cheaper.
	buy more capital because it is more productive than labor.

(4)

Derived demand for labor means that when a firm hires labor, it has to derive its demand

	mathematically.
	based on the labor supply.
	from the demand for the product that the labor produces.
	based on the minimum wage.

(5)

For a firm in perfect competition, the value of the marginal product is

	the value of an additional unit of output measured in terms of additional cost.
	the total value of the total output output divided by the total output.
	additional revenue minus additional cost as a result of an increase in output.
	the price of the product multiplied by the additional output resulting from an additional unit employed.

(6)

A firm that is perfectly competitive will hire labor as long as which of the following is true?

	VMP < W.
	VMP > W.
	MC > MR.
	VMP < MRP.

(7)

The VMP curve slopes downward at some point because

	congestion in the work place lowers marginal product.
	teamwork in the work place increases marginal product.
	the firm hires less labor as the wage rate rises.
	labor supplies less amounts of labor as the wage rate falls.

(8)

Which of the following would not be considered capital in a business?

	The employees
	The factory
	A machine
	Tools

(9)

The increase in the value of a firmâs capital as it increases in age and use is depreciation.

	true
	false

(10)

On a labor market graph, a firmâs demand for labor is

	the wage rate.
	the marginal revenue product curve.
	the marginal product curve.
	indeterminant.

(11)

Why may a householdâs labor supply curve bend backwards at some wage rate?

	The household substitutes labor for leisure.
	The household substitutes leisure for labor.
	Employers demand fewer employees at higher wage rates.
	Households want to supply more labor as the wage rate decreases to maintain incomes.

(12)

The substitution effect is usually stronger than the income effect, thus creating an upward sloping labor supply curve.

	true
	false

(13)

An inelastic demand for labor means that an increase in the wage rate causes a less than proportionate decrease in the quantity of labor demanded.

	true
	false

(14)

Marginal revenue product is

	marginal revenue divided by marginal product.
	marginal revenue times marginal product.
	marginal product minus marginal revenue.
	marginal product plus marginal revenue.

(15)

A firm obeys the least-cost rule by equating the ratios of ___________________ to the ________________ price.

	marginal product; product
	marginal product; factor
	marginal cost; product
	marginal revenue; product

(16)

Suppose the MP of the last unit of capital hired equals 12 and the MP of the last unit of labor hired equals 16.If the price of capital is $8 per unit and the price of labor is $8 per unit, then the firm

	is maximizing its costs with this combination of factors.
	is maximizing its profits with this combination of factors.
	should hire more labor and less capital in order to minimize its costs.
	should hire more capital and less labor in order to minimize its costs.

(17)

For a firm to minimize its costs with more than one factor of production, for every factor, the ratio of the

	marginal product to factor price must be equal.
	marginal revenue product to factor price must be equal.
	marginal revenue product to output must be equal.
	marginal cost to factor price must be equal.

(18)

A monopsony is a firm that, in a specific market, is the only

	seller of a product.
	buyer of a product.
	seller of a factor of production.
	buyer of a factor of production.

(19)

Which of the following businesses would most closely approximate a monopsonist?

	A steel mill in Pittsburgh
	A fast food franchise in a large city
	A large manufacturer in a rural county
	A rancher who hires ranch help

(20)

A firm has the opportunity to buy a machine that costs $2500. It has found the present value of the income generated by the machine to be $2487. It should purchase the machine.

	true
	false

(21)

An increase in the market rate of interest causes

	a leftward shift in the demand for capital curve.
	a rightward shift in the demand for capital curve.
	a movement up the demand for capital curve.
	a movement down the demand for capital curve.