HW 13 - Stephanie Chin Mangum Microeconomics Ch 13 Homework 1 Resource prices are significant because they effect money-income determination In

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Stephanie Chin Mangum Microeconomics Ch. 13 Homework 1. Resource prices are significant because they effect money-income determination. In other words the price of resources determines how much a firm will spend on the resource. The demand for a product causes the demand for a resource. The more productive a company is with a product the more resources will be demanded. The resource demand is derived because it depends on the product. Resource demand curves slope downwards because of diminishing returns. 2. Key Question a. If market wage rate is $27.95, the company will hire 2 workers because that is when MRP and MRC are closest. If the market wage rate is $19.95, the company will hire 4 workers because MRP is 20 and MRC is 19.95. By the MRP and MRC rule the company will hire workers until MRP and MRC are equal. Units of Labor Total Product Marginal Product Product Price Total Revenue Marginal Revenue Product 0 0 -- 2 0 -- 1 17 17 2 34 34 2 31 14 2 62 28 3 43 12 2 86 24 4 53 10 2 106 20 5 60 7 2 120 14 6 65 5 2 130 10
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b. c.
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This note was uploaded on 02/21/2008 for the course ECON 203 taught by Professor Al-sabea during the Fall '05 term at USC.

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HW 13 - Stephanie Chin Mangum Microeconomics Ch 13 Homework 1 Resource prices are significant because they effect money-income determination In

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