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Doncouse_Jeremy_Week - Jeremy Doncouse ECON202 Key Questions/1/2008 2 Marginal Units of Total Marginal Product Total Revenue Labor Product Product

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Jeremy Doncouse ECON202 Key Questions Chapter 25 11/1/2008 2) Marginal Units of Total Marginal Product Total Revenue Labor Product Product Price Revenue Product 0 0 0 \$2 \$0 \$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 a) If the market wage is \$27.95, then the firm will hire 2 workers. If the market wage is \$19.95, then the firm will hire 4 workers. The firm won't hire more or less workers because the MRP = MRC rule in pure competition states that the firm will hire workers up to the point at which the market wage rate (MRC) is equal to its MRP. If the firm hired too many workers (MRC > MRP), then they will lose money. If the firm hires less workers (MRC < MRP), then the firm will not be as productive as they could be. b) Demand Schedule MRP = MRC Marginal Units of Revenue Labor Product 0 \$0 1 34 2 28 3 24 4 20 5 14 6 10 The MRP schedule constitues the firm's demand for labor, because each point on the schedule (or curve) indicates the number of workers the firm would hire at

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This note was uploaded on 03/08/2011 for the course ECON 202 taught by Professor Unknown during the Fall '08 term at Mountain State.

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Doncouse_Jeremy_Week - Jeremy Doncouse ECON202 Key Questions/1/2008 2 Marginal Units of Total Marginal Product Total Revenue Labor Product Product

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