Question

19. How many days of labor should the firm hire if the wage is $30/day of labor? 0 1 2 3 4 5 6 7 Can't tell 20. How many days of labor should the firm hire if the wage is $10/day of labor? 0 1 2 3 4 5 6 7 Can't tell 21. How many days of labor should the firm hire if the wage is $0/day of labor? 0 1 2 3 4 5 6 7 Can't tell 22. What happens to the demand curve for labor if the price of output rises to $12/unit? It shifts left It shifts right move left along the Demand curve move right along it 23. What is the value of the marginal product of labor for the 4th day of labor in part e.? $7 $10 $30 $36 $60 $70 $72 $84 $100 $150

Answer 1

a. Marginal product of worker-

1 Labor=7-0=7 unit,2 Labor=13-7=6 unit, 3 labor=19-13=6 unit,4 Labor=25-19=6 unit, 5 Labor=28-25=3 unit,6 Labor=29-28=1 unit, 7 Labor=29-29=0 unit

b Marginal Product value if product sells at $10 per unit is given by Marginal product *price so from a)

Labor1=7*10=70,Labor 2=60, Labor3=60,Labor4=60,Labor5=30,Labor6=10,Labor7=0

19. Firm should hire labor till MP of labor=MC since Wage per labor=30 so firm should hire till level where MP=$30 from b) this is at unit 5 Hence, firm should hire 5 days of labor

20. If wage =$10, MP =$10 at labor6 from b) Hence 6 labor day is correct

21 is the wage is 0 then the firm can hire 7 labor day as at 7th labor day MP=0 so + is correct

22 If price rise to $12 from current $10 demand for product will move left as demand for the product decreases then demand for labor will also move aling the demand curve of product to left hence, move left along the demand curve

23.From b) MP at 4th labor day =60