Chapter 18 Homework Answer Keys

Chapter 18 Homework Answer Keys - 362 Chapter 18/The...

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362 ) Chapter 18/The Markets for the Factors of Production change, and changes in the supply of other factors. 3. Events that could shift the supply of labor include changes in tastes, changes in alternative opportunities, and immigration. 4. The wage can adjust to balance the supply and demand for labor while simultaneously equaling the value of the marginal product of labor. Supply and demand for labor determine the equilibrium wage. Firms maximize profits by choosing the amount of labor where the wage is equal to the value of the marginal product of labor. 5. A large immigration would increase the supply of labor, thus reducing the wage. With more labor working with capital and land, the marginal product of capital and land is higher, so rents earned by owners of land and capital would increase. Problems and Applications 1. a. The law requiring people to eat one apple a day increases the demand for apples. As shown in Figure 2, demand shifts from D 1 to 2 , increasing the price from P 1 to 2 , and
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This note was uploaded on 04/26/2011 for the course ECON 201 taught by Professor Joyce during the Spring '07 term at Drexel.

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Chapter 18 Homework Answer Keys - 362 Chapter 18/The...

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