Doncouse_Jeremy_Week5-2

Doncouse_Jeremy_Week5-2 - Jeremy Doncouse Key Questions...

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Jeremy Doncouse Key Questions Chapter 26 ECON202 11/1/2008 3) a S w1 e b s = MRC W1 D = MRP c d = mrp 0 q1 Q1 Quantity of labor Individual Firm Quantity of labor Labor Market Wages are determined where MRP = MRC. Because an individual firm employs a relatively small number of the labor supply labor is perfectly elastic. Total revenue and total cost are represented by 0abc. The green area is total wage cost. The triangle eab represents nonlabor costs. 4) Units of Wage Labor Labor Rate Cost MRC 0 $14 $0 14 1 14 14 14 2 14 28 14 3 14 42 14 4 14 56 14 5 14 70 14 6 14 84 14 In pure competition the wage rate, supply, and therefore, the MRC are equal. The units of labor increase at the same rate and each receive the same pay/hr. 6) Units of Wage Labor Labor Rate Cost MRC 0 $6 $0 0 1 9 9 9 2 12 24 15 0 1 2 3 4 5 6 0 2 4 6 8 10 12 14 16 MRC Quantity of labor Cost 40 50 Labor MRC Marginal Rev- enue Product Wage rate
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3 15 45 21 4 18 72 27 5 21 105 33 6 24 144 39 As a firm employs more labor each unit of labor costs the firm more and more. They are only equal on the first unit produced. The firm hires between 2 and 3 workers at just over $12 per hr. These answers are different from that of question 4 because in pure competition each employer hires too few laborers to make any difference in the market. In monopsony there is a single employer of labor with substantial hiring power.
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Doncouse_Jeremy_Week5-2 - Jeremy Doncouse Key Questions...

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