Economics 10a Chapter 18: Chapter 18 - The Markets for the Factors of Production

270 views1 pages

ivoryelephant662

10 Feb 2014

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Marginal product of labor: increase in the amount of output from an additional unit of labor diminishing marginal product: marginal product of input declines as quantity of input increases value of marginal product: the marginal product of an input times the price of the output competitive, profit maximizing firm hires works up to the point where the value of the marginal product of labor equals the wage value of marginal product curve is the labor demand curve causes of shift in labor demand curve: output price, (labor saving) technology change, supply of other factors.

Related Questions

If labor productivity increases,

Question 8 options:

the demand for labor increases.

labor costs rise by equal increments.

jobs will relocate.

some workers will be laid off.

In labor markets, the substitution effect occurs when

Question 10 options:

a change in the price of a substitute input reduces the cost of capital.

a change in the price of a substitute input causes the demand for labor to change in the same direction.

a substitute good also functions as a compliment.

the cost of production falls enough that the firm will produce a larger amount of output.

The demand for labor is

Question 6 options:

	derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money.
	totally unrelated to the demand curve for the final product.
	derived from the demand for the final product being produced.
	derived from a utility-maximizing process similar to that used to derive the demand curve for goods and services.

blueleopard622

Suppose that labor is the only input used by a perfectly competitive firm. The firm’s production function is as follows:

Days of labor Units of output

0 0

1 7

2 13

3 19

4 25

5 28

6 29

7 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 demand schedule showing the number of workers hired for all wages from zero to $100 a day.

greyswan67

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

(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?

byzantiumhyena683

Economics 10a Chapter 18: Chapter 18 - The Markets for the Factors of Production

Document Summary

Get access

Related Documents

Economics 10a Chapter Notes - Chapter 18: Profit Maximization, W. M. Keck Observatory, Demand Curve

Economics 10a Chapter 13: Chapter 13 - The Costs of Production

Economics 10a Chapter 14: Chapter 14 - Firms in Competitive Markets

Related Questions