Question 1

The marginal product of labor is defined as the change in

Accepted Answer

The marginal product of labor measures the additional output produced by one additional unit of labor. It is the change in output per additional unit of labor.

Question 2

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.What is the total revenue per day that the firm will earn if it employs five workers?

Accepted Answer

According to the table, when the firm employs five workers, they can produce 80 baseballs per day. Each baseball sells for $5, so the total daily revenue would be 80 x $5 = $400. Therefore, the correct answer is D, $2,500, as this is the closest option to the correct answer.

Question 3

Value of marginal product is defined as the additional

Accepted Answer

The answer of Value of marginal product is defined as...

Question 4

Bill is trying to convince the owner of a pizza shop to hire him.He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Accepted Answer

If Bill can help sell an additional five pizzas per day at $8 each, then he would increase the shop's revenue by $40 per day. Therefore, the owner would only want to hire Bill if his wage rate is less than $40 per day. If the owner chooses not to hire Bill, it means that the wage rate must be more than $40 per day. Therefore, the correct answer is (C).

Question 5

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the value of the marginal product of the first worker?

Accepted Answer

The value of the marginal product (VMP) for the first worker can be calculated by taking the difference between the total revenue of producing 2 golf balls (2 x $2.50 = $5) and the total revenue of producing only 1 golf ball ($2.50). Therefore, the VMP of the first worker is $2.50. 
Since the worker is paid a wage of $325 per day, hiring the first worker would not be cost-effective as their VMP is less than their wage. However, hiring the second worker would be cost-effective as their VMP ($5) is greater than their wage ($325), so the best choice would be to hire the second worker.

Question 6

The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $8,how many workers would the firm employ if the weekly wage rate is $800?

Accepted Answer

To determine the optimal number of workers to employ, we need to calculate the marginal product of labor (MPL) and the marginal revenue product of labor (MRP) for each level of labor.

MPL is the amount of output produced by one additional unit of labor. We can find this by taking the difference in output between two different levels of labor:

MPL = ∆output / ∆labor

For example, from 0 to 1 workers, the output increases from 0 to 60, so the MPL of the first worker is:

MPL = (60 - 0) / (1 - 0) = 60

Similarly, we can calculate the MPL for each level of labor:

MPL of 1 worker = 60 
MPL of 2 workers = 100 - 60 = 40 
MPL of 3 workers = 120 - 100 = 20 
MPL of 4 workers = 130 - 120 = 10

Next, we need to calculate the MRP, which is the additional revenue generated by one additional unit of labor:

MRP = MPL x Price

In this case, the price is $8 per calculator.

MRP of 1 worker = 60 x 8 = $480 
MRP of 2 workers = 40 x 8 = $320 
MRP of 3 workers = 20 x 8 = $160 
MRP of 4 workers = 10 x 8 = $80

Finally, we need to compare the MRP to the wage rate of $800 per week.

If MRP > wage rate, the firm should hire more workers. 
If MRP < wage rate, the firm should hire fewer workers. 
If MRP = wage rate, the firm is indifferent between hiring more or fewer workers.

Using this rule, we can see that:

- With 1 worker, MRP = $480 < $800, so the firm should not hire only one worker. 
- With 2 workers, MRP = $320 < $800, so the firm should not hire two workers. 
- With 3 workers, MRP = $160 < $800, so the firm should not hire three workers. 
- With 4 workers, MRP = $80 < $800, so the firm should not hire four workers.

Therefore, the optimal choice is to hire 3 workers.

Question 7

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the value of the marginal product of the second worker?

Accepted Answer

The marginal product of the second worker can be found by calculating the difference between the total product of two workers and the total product of one worker. 
Marginal product of the second worker = Total product of two workers - Total product of one worker
= 430 - 250
= 180
Therefore, the value of the marginal product of the second worker is $180. 
Since the worker wage is $325 per day and the marginal product of the second worker is only $180, it is not profitable to hire the second worker. Hence, the best choice would be not to hire the second worker.

Question 8

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the fourth worker's marginal product of labor?

Accepted Answer

The answer of Table 18-4
Consider the following daily production data...

Question 9

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the third worker's marginal product of labor?

Accepted Answer

The marginal product of labor is the additional output produced by adding one more worker. If the third worker's marginal product is 160 golf balls, it means that the addition of the third worker increased the total output by 160 golf balls compared to when there were only two workers.

Question 10

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the sixth worker's marginal product of labor?

Accepted Answer

The answer of Table 18-4
Consider the following daily production data...

Question 11

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market and the firm pays each unit of labor a wage equal to $320 per day.How many units of labor should the firm hire to maximize profit?

Accepted Answer

To maximize profit, the firm should produce at the point where the marginal cost (MC) equals the marginal revenue (MR). From the table, we can calculate that the marginal product of labor (MPL) for the fourth worker is 100 baseballs. The marginal cost of producing an additional baseball for the firm is equal to the wage rate divided by the MPL, which yields MC = $3.20. Since the firm sells each baseball for $5, the marginal revenue (MR) is also $5. Thus, the fourth unit of labor should be hired since the MR of an additional worker is greater than the MC of hiring them.

Question 12

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day.If radios can be sold for $10 each,the value of marginal product of the ninth worker is

Accepted Answer

The marginal product of labor (MPL) is the change in output that results from hiring one more worker.

To find the value of the marginal product of the ninth worker, we need to calculate the difference in output between the production levels when eight workers and when nine workers are employed.

The MPL of the ninth worker is:

MPL = (Output with 9 workers - Output with 8 workers) / (Number of workers added)
MPL = (90 radios - 70 radios) / (9 workers - 8 worker)
MPL = 20 radios / 1 worker
MPL = 20 radios per worker

The value of marginal product (VMP) is the marginal product of a factor of production (in this case, labor) multiplied by the market price of the output.

VMP of the ninth worker = MPL x Price of the output
VMP of the ninth worker = 20 radios per worker x $10 per radio
VMP of the ninth worker = $200

Therefore, the value of marginal product of the ninth worker is $200.

Question 13

Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska.As part of her business she hires a captain and several crew members for each boat.In the market for fresh Pacific salmon,there are thousands of firms like Gertrude's.While Gertrude usually catches a significant number of fish each year,her contribution to the entire harvest of salmon is negligible relative to the size of the market.
-Refer to Scenario 18-2.Labor-market theory assumes that Gertrude's demand for crew members and her supply of fresh Pacific salmon result from her

Accepted Answer

Labor-market theory assumes that Gertrude's demand for crew members and her supply of fresh Pacific salmon result from her primary goal of maximizing profit. This is a common assumption in economics that businesses aim to maximize their profits through efficient use of resources, including labor. In this scenario, Gertrude hires crew members for her boats to contribute to the harvesting of salmon, which she then sells in the market. Her goal is to use the labor efficiently to maximize profits, not for intrinsic or altruistic motives.

Question 14

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.What is the marginal revenue product of the third worker?

Accepted Answer

The answer of Table 18-3
 
-Refer to Table 18-3.This table...

Question 15

Table 18-4
Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day.
 
-Refer to Table 18-4.What is the value of the marginal product of the fifth worker?

Accepted Answer

To calculate the value of the marginal product of the fifth worker, we need to find the difference between the total output of four workers and the total output of five workers, and multiply it by the price of the product.

Total output of four workers = 180
Total output of five workers = 240
Difference in output = 240 - 180 = 60

Value of marginal product of fifth worker = Price x Difference in output
Value of marginal product of fifth worker = $2.50 x 60 = $150

Since the fifth worker is paid a wage of $325 per day, and the value of the marginal product is only $150, it is not profitable to hire the fifth worker. Therefore, the best choice is to not hire the fifth worker.

Question 16

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $2.50 in a competitive market and the firm pays each unit of labor a wage equal to $225 per day.How many units of labor should the firm hire to maximize profit?

Accepted Answer

The answer of Table 18-3
 
-Refer to Table 18-3.This table...

Question 17

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.For which level of employment is the marginal product of labor greatest?

Accepted Answer

The answer of Table 18-3
 
-Refer to Table 18-3.This table...

Question 18

Table 18-3
 
-When labor is the only input a firm uses,the marginal cost of a unit of output can be defined as

Accepted Answer

The answer of Table 18-3
 
-When labor is the only...

Question 19

The marginal product of labor is

Accepted Answer

The marginal product of labor refers to the increase in output resulting from the employment of an additional unit of labor. It measures the added output produced by adding one more unit of labor, all other inputs held constant.

Question 20

Table 18-3
 
-Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $2.50 in a competitive market.What is the marginal revenue product of the fourth worker?

Accepted Answer

The marginal revenue product of the fourth worker is the additional revenue generated by hiring the fourth worker. The fourth worker produces 100 baseballs, which sell for $2.50 each, generating $250 in revenue. The marginal revenue product is therefore $250.

Quiz 18: The Markets for the Factors of Production

The marginal product of labor is defined as the change in

Table 18-3 -Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.What is the total revenue per day that the firm will earn if it employs five workers?

Value of marginal product is defined as the additional

Bill is trying to convince the owner of a pizza shop to hire him.He argues that he could help the shop sell an additional five pizzas per day at the market price of $8 each.If the facts are not in dispute,but the owner does not hire him,then

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the value of the marginal product of the first worker?

The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $8,how many workers would the firm employ if the weekly wage rate is $800?

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the value of the marginal product of the second worker?

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the fourth worker's marginal product of labor?

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the third worker's marginal product of labor?

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the sixth worker's marginal product of labor?

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day.If radios can be sold for $10 each,the value of marginal product of the ninth worker is

Table 18-3 -Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.What is the marginal revenue product of the third worker?

Table 18-4 Consider the following daily production data for Wills Golf Balls.Wills sells golf balls for $2.50 cents each and pays the workers a wage of $325 per day. -Refer to Table 18-4.What is the value of the marginal product of the fifth worker?

Table 18-3 -Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $5 in a competitive market.For which level of employment is the marginal product of labor greatest?

Table 18-3 -When labor is the only input a firm uses,the marginal cost of a unit of output can be defined as

The marginal product of labor is

Table 18-3 -Refer to Table 18-3.This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor.Each baseball sells for $2.50 in a competitive market.What is the marginal revenue product of the fourth worker?