Ch013EndOfChapterQuestions[1]

# Ch013EndOfChapterQuestions[1] - The Demand for Resources...

This preview shows pages 1–2. Sign up to view the full content.

The Demand for Resources ANSWERS TO END-OF-CHAPTER QUESTIONS 13-2 ( Key Question ) Complete the following labor demand table for a firm that is hiring labor competitively and selling its product in a competitive market. Units of labor Total product Marginal product Product price Total revenue Marginal revenue product 0 1 2 3 4 5 6 0 17 31 43 53 60 65 ____ ____ ____ ____ ____ ____ ____ \$2 2 2 2 2 2 2 \$____ ____ ____ ____ ____ ____ ____ \$____ ____ ____ ____ ____ ____ a. How many workers will the firm hire if the going wage rate is \$27.95? \$19.95? Explain why the firm will not hire a larger or smaller number of units of labor at each of these wage rates. b. Show in schedule form and graphically the labor demand curve of this firm. c. Now again determine the firm’s demand curve for labor, assuming that it is selling in an imperfectly competitive market and that, although it can sell 17 units at \$2.20 per unit, it must lower product price by 5 cents in order to sell the marginal product of each successive labor unit. Compare this demand curve with that derived in question 2b. Which curve is more elastic? Explain. Marginal product data, top to bottom: 17; 14; 12; 10; 7; 5. Total revenue data, top to bottom: \$0, \$34; \$62; \$86; \$106; \$120; \$130. Marginal revenue product data, top to bottom: \$34; \$28; \$24; \$20; \$14; \$10. (a) Two workers at \$27.95 because the MRP of the first worker is \$34 and the MRP of the second worker is \$28, both exceeding the \$27.95 wage. Four workers at \$19.95 because workers 1 through 4 have MRPs exceeding the \$19.95 wage. The fifth worker’s MRP is only \$14 so he or she will not be hired.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern