ECF1100 Lecture Notes - Lecture 5: Marginal Product, Demand Curve, Opportunity Cost

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rosebadger52

18 Jul 2018

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Week 5 - applications of supply and demand: international trade and labour markets. Value of the marginal product: the marginal product of labour is the additional output a firm produces as a result of hiring one more worker. Mpl = q/ l: the value of the marginal product is the marginal product of an input times the price of the output. Vmpl = mpl x p: for a competitive firm, the value of the marginal product is the extra revenue the firm gets from hiring an additional unit of a factor of production. Shifts in labour supply: increases in population, changing demographics, expansion or contraction of particular industries, availability and level of unemployment benefits and other government transfers. A: specialization based on comparative advantage leads to increased consumption possibilities. A: produce and export goods and services in which the economy has a comparative advantage; import goods and services in which the economy does not have a comparative advantage.

Related Questions

1. The addition to the revenue obtained from firing an additional unit of labour is:

a. marginal revenue product

b. marginal physical product of labour

c.total product

d. marginal factor cost

2. The firm's demand curve for labour is:

a. the demand curve for the good produced divided by the price of the good

b.the marginal revenue product curve for labour

c.the marginal physical product curve for labour divided by the good

d. the marginal physical product curve for labour multiplied by the price of labour

3. If the price of the product is $1.50 and the marginal factor cost of an additional unit of input is $105, how many units of labour should be hired?

Labor input (workers/day)_______________________________-total physical product (output/day)

10 __________________________________________________500

11__________________________________________________600

12__________________________________________________690

13___________________________________________________760

14___________________________________________________800

a. 14

b.12

c.13

d.11

4. the price elasticity of demand for labour equals

a. the change in quantity demanded of labour divided by the change in the price of labour

b. the slope of the demand curve for labour

c. the percentage change in the price of labour divided by the percentage change in the supply of labour

d. the per cent change in the quantity demanded of labour divided by the percentage change in the price of labour

5. We would expect that a rise in labour supply will have a proportionately larger effect on the market wage rate when:

a. the supply for labour is elastic

b.the demand for labour is unitary elastic

c.the demand for labour is elastic

d.the demand for labour is inelastic

orangerhinoceros668

Question 1

The following table is a record of the data of a competitive firm on labour and output:

Unit of labour	Total product	Marginal product of labour (MPL)	Value of marginal product of labour (VMPL)
0	0
1	10
2	22
3	32
4	39
5	42
6	41

Suppose the product price is $5 and the market wage per unit of labour is $35.

a Reproduce the above table on your answer sheet and complete the table.

b How many units of labour should be employed to maximise profit? Briefly explain your answer.

1. In a perfectly competitive industry, an individual firm faces:

a. a perfectly elastic labour supply curve

b. a perfectly inelastic labour supply curve

c.a perfectly vertical labour supply curve

d.none of the above

2. A firm purchases more capital equipment. We would expect to observe:

a. an increase in the supply of labour for this firm

b. a decrease in the supply curve of labour for this firm

c.an increase in the wage rate paid for labour by this firm

d.an increase in the demand for labour by this firm

3. Which of the following would be h most likely outcome if all perfectly competitive firms in a product market join together to form a monopoly?

a. the rate of output in the market will increase but the quantity of labour input will decrease

b.both the rate of output and the quantity of labour input employed will increase

c.the rate of output in the market will decrease but the quantity of labour input will increase

d.both the rate of output and the quantity of labour input employed will decrease

4. what does the marginal revenue product equal when 28 workers are hired in one week?

Labor input (workers per week)__Marginal physical product (output per week)__marginal revenue

25_______________________150_________________________________9.00

26_______________________140_________________________________8.50

27_______________________130_________________________________8.00

28_______________________120_________________________________7.50

29_______________________110________________________________7.00

a. $210

b.$7.50

c.$900

d.$1040

5. The profit-maximizing firm will hire additional workers until:

a. the extra revenue by the last workers hired equals zero

b.the extra cost associated with hiring the last worker equals the price of goods produced

c.the additional cost associated with hiring the last worker equals the average wage rate of workers

d.the additional cost associated with hiring the last worker equals the additional revenue generated by that worker.

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ECF1100 Lecture Notes - Lecture 5: Marginal Product, Demand Curve, Opportunity Cost

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