Question

Factor Market Practice FRQ Cleanlt is a competitive labor market. perfectly competitive, profit-maximizing trash collection firm. Cleanlt hires workers in a perfectly Draw side-by-side graphs for the labor market and for Cleanit and show each of the following. a. e market wage, labeled Wm, and the quantity of workers hired in the market, labeled Lm i. The marginal factor (resource) cost curve, labeled MFC ili. The marginal revenue product curve, labeled MRP iv. The wage paid by the firm, labeled Wf, and the quantity of workers hired by the firm, labeled Lt b. Assume that Cleanlt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of Cleanlt's workers. i. In the short run, will the wage paid by Cleanlt be higher than, lower than, or equal to Wf? Explain. i. In the short run, will the number of workers hired by Cleanlt increase, decrease or stay the same? Explain. Cleanlt uses capital in the form of trucks, which it rents for $10,000 each. The marginal product of the last truck used is 100,000 units. If Cleanlt is minimizing its costs and the marginal product of the last c. worker hired is 500 units, calculate the wage. Show your work.

Answer 1

A- ARP MRP Lm Labours ETmployed → Labous Employed T r t s detes mined by e mas ot demand秎us -tee average-factors cost eguaas manginal Aectios cost eauals the wage aaate.

Part B. - Technological progress does not create rising unemployment rates. Instead it raises the lowest wage that firms can pay while still covering their costs. As a result, technological progress expands the resources the firm has to invest in increasing production, and it also incentivizes continued investment. Thus Technological innovation merely changes the types of jobs that occur in the economy. If labour productivity increases, we can enjoy a greater range of goods and services. If the Industry in which one is employed is flexible then no such thing as increase in unemployment will be observed.

So in the short run the number of workers Cleanit needs may decline depending upon the industry.

Answer 2

What is part C?