Tutorial+11+Solutions

# Tutorial+11+Solutions - Eco1010f Tut assignment 11 rd Due...

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Eco1010f Tut assignment 11 Due date: week beginning 3 rd May 2010 1. In a neo-classical world, to obtain a firm’s demand curve for labour we would need to know: 1. the market price of the product it produces 2. the Marginal Product of labour curve below the Average Product of labour 3. the Average Variable Cost of production 4. the Marginal Cost of production above the average variable cost a) 1 and 2 * b) 1 and 4 c) 2 and 3 d) 2 and 4 e) only 4 2. In a perfectly competitive market, the short-run demand for labour will be downward sloping because of: a) decreasing returns to scale b) the law of diminishing marginal returns * c) the need to minimize production costs d) the fall in product prices as the firm increases its output e) all of the above are true Questions 3 and 4 refer to the following diagram which shows the operations of a perfectly competitive firm in a competitive labour market. wage/hr.           12           10          ARP   MRP      =VMP        10  20  30 40     85 90  100   130 150      N

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5. If the wage rate is R12 per hour, the entrepreneur will want to a) hire 20 workers b) hire 40 workers c) hire 85 workers d) hire 90 workers e) fire all the workers * 6. if the wage rate is R10 per hour, a profit maximizing employer will a) hire 10 workers b) hire 30 workers c) hire 90 workers d) hire 100 workers * e) hire 150 workers 7. A change in a factor’s price will have a greater effect on the quantity of that factor demanded: A. the more inelastic is the demand for the product the factor helps to make B. the more elastic is the demand for the product the factor helps to make C. the greater the proportion of total costs of producing the product represented
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## This note was uploaded on 02/28/2012 for the course ECO 1010F taught by Professor Catherinekannemeyer during the Spring '11 term at University of Cape Town.

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Tutorial+11+Solutions - Eco1010f Tut assignment 11 rd Due...

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