The table above shows the relationship between the number of mechanics the firm

The table above shows the relationship between the

This preview shows page 3 - 4 out of 4 pages.

hiring. The table above shows the relationship between the number of mechanics the firmhires and the quantity of oil changes it produces.a.Suppose the price of an oil change is $20. Complete the table by filling in the valuesfor marginal product and marginal revenue product.b.Oil Can Harryʹs is an input price-taker. Suppose the wage paid to mechanics is $80per day. What is the profit-maximizing number of mechanics?c.Suppose the wage rate rises to $100 per day.(i) What happens to the firmʹs demand curve for mechanics?(ii) What happens to the profit-maximizing quantity of mechanics?d.Suppose the wage rate is $60 per day and the price of haircuts is now $15.(i) What happens to the firmʹs demand curve for mechanics?47)Answer: a.Number ofMechanicsOilChangesper DayMarginalProductMarginalRevenueProduct166$12021261203175100421480524360626240b.The profit-maximizing number of mechanics is 4, where the marginal revenueproduct equals the wage rate.c.(i) The demand curve does not change.(ii) The profit-maximizing quantity of mechanics falls to 3.d.(i) The demand curve shifts to the right.(ii) The profit-maximizing quantity of mechanics increases to 4.Diff: 3Page Ref: 546-550/546-550Topic: The Demand for LaborLearning Outcome: Micro 17: Explain the effects of the factors of production, factor demand, andfactor supply and labor in factor marketsAACSB: Analytic Skills15
Background image
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Background image

You've reached the end of your free preview.

Want to read all 4 pages?

  • Spring '11
  • Lee
  • Economics, Harshad number, AACSB, Page Ref

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes