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
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
- Spring '11
- Economics, Harshad number, AACSB, Page Ref