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Unformatted text preview: Practice Questions: Chapter 14 Market for Factor Inputs 1. Clarke Mementos manufactures small figurines that they sell to retailers around the country. Clarke sells the figurines for $5.00 each, a price the firm considers given. Clarke's production function is given by the expression: Q = 60L - 0.5L 2 , where Q = number of figurines per day, and L = number of skilled workers per day. Based on this production function, the average and marginal products of labor are as follows: AP = 60 - 0.5L MP = 60 - L a. Write an expression for the firm's marginal revenue product. b. Clarke currently pays $150 per day (including fringe benefits) for each of its skilled workers. How many workers should the firm employ? c. Clarke's workers are highly skilled artisans with a great deal of job mobility. The firm's managers fear that they must increase the workers' total compensation to $200 per day to remain...
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- Fall '11