EC202-A2S10_Answers

EC202-A2S10_Answers - EC 202(01) – Assignment # 2 S10 –...

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Unformatted text preview: EC 202(01) – Assignment # 2 S10 – Answers 1 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 MPN MRPN W = $50 MRPN W = $40--- 1 11 11 55 55 2 21 10 50 50 3 29 8 40 40 4 36 7 35 35 5 42 6 30 30 6 43 1 5 5 a) Calculate the marginal product of labour MPN for each worker. See Table One b) If the firm sells its output at $5/unit, calculate the MRPN for each worker. See Table One c) If the wage rate is $50 per day, what is the real wage rate? The real wage is W/P or $50/$5 = 10 d) What is the firm’s profit-maximizing level of employment? The firm’s profit-maximizing level of employment is at two (2) workers. where: W ($50) = MRPN ($50) Alternatively, the firm’s profit-maximizing level of employment is at (2) workers where: w (10) = MPN (10) e) If the wage rate falls to $40 per day, what will be the new profit-maximizing level of employment?If the wage rate falls to $40 per day, what will be the new profit-maximizing level of employment?...
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This note was uploaded on 07/12/2010 for the course ECON 202 taught by Professor Angelatrimarchi during the Spring '10 term at Waterloo.

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EC202-A2S10_Answers - EC 202(01) – Assignment # 2 S10 –...

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