Question

In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the table below. Assume the product price is $3.

Calculate the marginal revenue product and the marginal resource cost, and then complete the table.

Instructions: Enter your answers as whole numbers.

Final Exam G Saved Help Save & Exit 2 In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the table below. Assume the product price is $3. Calculate the marginal revenue product and the marginal resource cost, and then complete the table. Instructions: Enter your answers as whole numbers. 5.55 points Marginal Revenue Product ($) Hourly Wage Rate (S) Marginal Resource (Labor) Cost ($) Quantity ofTotal Product Marginal Product Total Labor Cost (S) 01:28:42 Labor 10 200 13 130 - 11 216 16 48 14 154 24 230 180 12 14 42 15 26 eBook 13 242 12 36 16 208 28 14 252 10 30 17 238 30 15 260 8 24 18 270 32 The equilibrium wage rate ($)= The equilibrium level of labor use workers

Answer 1

The equilibrium wage rate occurs at the point where Marginal revenue product of labor is equal to Marginal Resource Cost of Labor. In the table above, both are equal at 30 units. Thus, equilibrium wage rate is equal to $17 per hour and at this wage rate the equilibrium level of labor use in the first column is equal to 14 workers.

Thus, equilibrium wage rate = $17 and equilibrium level of labor use = 14 workers.