Labor Output Price (D1) Price (D2)
0
0
10.00
10.00
1
15
10.00
9.50
2
29
10.00
9.00
3
42
10.00
8.50
4
54
10.00
7.50
5
65
10.00
6.50
6
75
10.00
5.50
1. Suppose the firm's product demand is given by the column labelled D1. If the wage rate is $100, the firm will achieve maximum profit by hiring _____ workers.
a. 3 b. 4 c. 5 d. 6
2. Suppose the firm's product demand is given by the column labelled D1. If the wage rate rises from $100 to $130, the firm will reduce the quantity of labour employed by _____ unit(s)
a. 0 b. 1 c. 2 d. 3 16.
3.Suppose the firm's product demand is given by the column labelled D1. If the wage rate is $120, the firm will achieve maximum profit by hiring _____ workers.
a. 3 b. 4 c. 5 d. 6 3 17.
4. Suppose the firm's product demand is given by the column labelled D1. The value of the marginal product of the fourth worker is:
a. $10 b. $54 c. $120 d. $540 18.
5. Suppose the firm's product demand is given by the column labelled D2. If the wage rate is $100, the firm will achieve maximum profit by hiring _____ workers
a. 2 b. 3 c. 4 d. 5 19.
6. Suppose the firm's product demand is given by the column labelled D2. The extra revenue generated by the fourth worker is:
a. $1 b. $12 c. $48 d. $405 20.
7. Suppose the firm's product demand is given by the column labelled D2. If the wage rate rises from $100 to $130, the firm will reduce the quantity of labour employed by _____ unit(s).
a. 0 b. 1 c. 2 d. 3 21.
8. Compared to a firm facing D1, a firm facing demand schedule D2 but paying the same wage will hire:
a. the same number of workers, since the total product is the same in both instances
b. fewer workers, since product price declines as output increases
c. more workers, since product price declines as output increases
d. more information is required
Labor Output Price (D1) Price (D2)
| 0 | 0 | 10.00 | 10.00 |
| 1 | 15 | 10.00 | 9.50 |
| 2 | 29 | 10.00 | 9.00 |
| 3 | 42 | 10.00 | 8.50 |
| 4 | 54 | 10.00 | 7.50 |
| 5 | 65 | 10.00 | 6.50 |
| 6 | 75 | 10.00 | 5.50 |
1. Suppose the firm's product demand is given by the column labelled D1. If the wage rate is $100, the firm will achieve maximum profit by hiring _____ workers.
a. 3 b. 4 c. 5 d. 6
2. Suppose the firm's product demand is given by the column labelled D1. If the wage rate rises from $100 to $130, the firm will reduce the quantity of labour employed by _____ unit(s)
a. 0 b. 1 c. 2 d. 3 16.
3.Suppose the firm's product demand is given by the column labelled D1. If the wage rate is $120, the firm will achieve maximum profit by hiring _____ workers.
a. 3 b. 4 c. 5 d. 6 3 17.
4. Suppose the firm's product demand is given by the column labelled D1. The value of the marginal product of the fourth worker is:
a. $10 b. $54 c. $120 d. $540 18.
5. Suppose the firm's product demand is given by the column labelled D2. If the wage rate is $100, the firm will achieve maximum profit by hiring _____ workers
a. 2 b. 3 c. 4 d. 5 19.
6. Suppose the firm's product demand is given by the column labelled D2. The extra revenue generated by the fourth worker is:
a. $1 b. $12 c. $48 d. $405 20.
7. Suppose the firm's product demand is given by the column labelled D2. If the wage rate rises from $100 to $130, the firm will reduce the quantity of labour employed by _____ unit(s).
a. 0 b. 1 c. 2 d. 3 21.
8. Compared to a firm facing D1, a firm facing demand schedule D2 but paying the same wage will hire:
a. the same number of workers, since the total product is the same in both instances
b. fewer workers, since product price declines as output increases
c. more workers, since product price declines as output increases
d. more information is required
Related textbook solutions
Related questions
The table below shows a competitive firm's short-run production function. Labor is the firm's only variable input, and the market price for the firm's product is $2 per unit.
| Units of Labor | Units of Output |
| 3 | 370 |
| 4 | 490 |
| 5 | 570 |
| 6 | 600 |
| 7 | 620 |
1. How much does the fifth unit of labor add to the firm's total revenue?
A. $160.
B. $80.
C. $60.
D. $40.
E. $10.
2. If the wage rate is $200, how many units of labor will the firm employ?
A. 3.
B. 4.
C. 5.
D. 6.
E. 0, the firm shuts down.
3. If the wage rate is $200, the firm should
A. Shut down because the average revenue product is $200, which is less than the marginal revenue product.
B. Shut down because the average revenue product is $228, which is greater than the wage rate.
C. Produce because the average revenue product is $200, which is less than the marginal revenue product.
D. Produce because the average revenue product is $245, which is greater than the wage rate.
4. If the market price for the firm's production increases to $5, how many units of labor will the firm employ at a wage rate of $200?
A. 0, the firm shuts down.
B. 4.
C. 5.
D. 6.
E. 7.
Suppose that a monopoly firm finds that its MR is $72 for the first unit sold each day, $71 for the second unit sold each day, $70 for the third unit sold each day, and so on. Further suppose that the first worker hired produces 5 units per day, the second 4 units per day, the third 3 units per day, and so on.
Instructions: Enter your answers as whole numbers.
a. What is the firm's MRP for each of the first five workers?
| Worker | MRP, unregulated |
| 1 | |
| 2 | |
| 3 | |
| 4 | |
| 5 |
b. Suppose that the monopolist is subjected to rate regulation and the regulator stipulates that it must charge exactly $62 per unit for all units sold. At that price, what is the firm's MRP for each of the first five workers?
| Worker | MRP, regulated |
| 1 | |
| 2 | |
| 3 | |
| 4 | |
| 5 |
c. If the daily wage paid to workers is $258 per day, how many workers will the unregulated monopoly demand? Worker(s).
If the daily wage paid to workers is $258 per day, how many workers will the regulated monopoly demand? Worker(s).
Looking at those figures, will the regulated or the unregulated monopoly demand more workers at that wage? Unregulated/Regulated.
d. If the daily wage paid to workers falls to $121 per day, how many workers will the unregulated monopoly demand? Worker(s).
If the daily wage paid to workers falls to $121 per day, how many workers will the regulated monopoly demand? Worker(s).
Looking at those figures, will the regulated or the unregulated monopoly demand more workers at that wage? Unregulated/Regulated.
e. Comparing your answers to parts c and d, does regulating a monopoly's output price always increase its demand for resources? Yes/No.
Assume that the firm only uses labor as a resource in production and is hiring workers in a purely competitive labor market. In other words, the firm can hire as many workers as it wishes without affecting the equilibrium wage rate.
|
Units of Labor (L) |
Total Product (Q) |
Product Price (P) |
Total Revenue (TR) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
$2.20 |
$0 |
--- |
|
1 |
15 |
$2.00 |
$30 |
$30 |
|
2 |
28 |
$1.80 |
||
|
3 |
39 |
$1.60 |
||
|
4 |
48 |
$1.40 |
||
|
5 |
55 |
$1.20 |
||
|
6 |
60 |
$1.10 |
a. Is the firm selling its product in a purely competitive market or an imperfectly competitive market?
b. Fill out both the TR and MRP columns with the correct values.
c. Suppose the wage rate is $11.00 per worker. How many workers should be employed, in order to maximize profits?
d. If the firm hires the optimum number of workers, what is its total profit?
