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EC202-A2S10

# EC202-A2S10 - Question Two The marginal product of...

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EC 202(01)  – Assignment # 2 – S10 Question One Suppose that a firm’s daily output and labour input are given in Table One:  (The capital stock is fixed) Table One: Number of  Workers Output 0 0 1 11 2 21 3 29 4 36 5 42 6 43 a) Calculate the marginal product of labour MPN for each worker. b) If the firm sells its output at \$5/unit, calculate the MRPN for each worker. c) If the wage rate is \$50 per day, what is the real wage rate? d) What is the firm’s profit-maximizing level of employment? e) If the wage rate falls to \$40 per day, what will be the new  profit-maximizing level of employment?

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Unformatted text preview: Question Two The marginal product of labour (measured in units of output) for a certain firm is: MPN = A(100 - N) Where A measures productivity and N is the number of labour hours used in production. The price of output is \$2 per unit. EC 202(01) – Assignment # 2 – S10 a) If A = 1.0, what will be the demand for labour if the nominal wage rate is: i) \$10? ii) \$20 Graph the demand curve for labour. What is the equilibrium real wage rate if the supply of labour is fixed at 95? b) Repeat part (a) for A = 2.0....
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EC202-A2S10 - Question Two The marginal product of...

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