2. Problems and Applications Q2 Show the effect of each of the following events on the market for labor in the architecture industry. A slowdown in the economy reduces the demand for new buildings. O Supply Demand Supply Wage Demand Quantity of LaborThe Markets for the Factors of Production: Algorithmic End of Chapter 7. Problems and Applications Q7 Leadbelly Co. sells pencils in a perfectly competitive product market and hires workers in a perfectly competitive labor market. Assume that the market wage rate for workers is $80 per day. Leadbelly should follow this rule to hire the profit-maximizing amount of labor: Hire workers up to the point where the is $80 per day. At the profit-maximizing level of output, the marginal product of the last worker hired is 20 boxes of pencils per day. The price of a box of pencils is $ The following graphs show the labor market for pencil workers and the labor supply and demand for Leadbelly Co. Suppose some workers in the paper industry switch to jobs in the pencil industry. Show how this change affects the pencil market by shifting the labor-demand curve, labor-supply curve, or both. ? Pencil Market 160 144 Supply Demand 128 112 96 Supply 80 Wage 64 Demand 32 Quantity of LaborThe Markets for the Factors of Production: Algorithmic End of Chapter 36 Each unit of output sells for $8. Complete the fourth column of the preceding table by calculating the value of the marginal product of each worker. Complete the following demand schedule by indicating the maximum wage the firm would be willing to pay for each quantity of labor. Wage Quantity of Labor Demanded (Dollars per day of labor) (Days of labor) HNWAUO Use the blue points (circle symbol) to graph the firm's labor-demand curve, given the demand schedule you just derived. Note: Remember to plot each point between the two integers. For example, when the number of days increases from 0 to 1, the value of the marginal product of for the first day of labor should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points. (?) 80 Labor Demand WAGE (Dollars) 3 5 6 QUANTITY OF LABOR (Days) If the price of output rises from $8 to $10 per unit, the labor-demand curve Grade It Now Save & Continue Continue without saving8. Problems and Applications Q8 Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Consider the effects of such a policy on the labor market. Use the black point (plus symbol) to indicate the initial labor-market equilibrium. 15.00 Demand Supply 13.50 12.00 Initial Equilibrium 10.50 9.00 New Demand $ 7.50 6.00 New Equilibrium 4.50 3.00 1.50 Quantity of Labor Suppose that a law required firms to give each worker $3 of fringe benefits for every hour that the worker is employed by the firm On the preceding graph, use the purple line (diamond symbol) to graph the new labor-demand curve, assuming that the firm was not already offering fringe benefits. Then use the grey point (star symbol) to indicate the new labor-market equilibrium as a result of the required fringe benefits, assuming labor supply is unaffected by this law. True or False: Because fringe benefits are valuable to workers, the labor-supply curve might shift in response to this law, resulting in a lower wage than if the supply curve were unchanged. O True O False As discussed in Chapter 6, the wages of some workers, particularly the unskilled and inexperienced, are kept above the equilibrium level by minimum-wage laws. True or False: A fringe-benefit mandate would lead to higher level of unemployment for these workers. O True O False Grade It Now Save & ContinueBack 10 Assignment Attempts E3: Averagei 1 6. Problems and Applications Q6 Your enterprising uncle opens a sandwich shop that employs 5 people. The employees are paid $12 per hour, and a sandwich sells for $4. If your uncle is maximizing his prot, the value of the marginal product of the last worker he hired is , and that worker's marginal product is sandwiches per hour. Grade It Now Save 8: Continue Continue without saving 9. Problems and Applications Q9 Some economists believe that the U.S. economy as a whole can be modeled with the following production function, called the Cobb-Douglas productlon functlon: r = Alt-its where 1" Is the amount of output. If is the amount of capital, L Is the amount of labor, and A Is a parameter that measures the state of technology. For this production function, the marginal product of labor Is: Suppose that the price of output (F) is $2. A is 3, K Is 2,985,934. and L is 1,728. The labor market is competitive, so labor is paid the value of its marginal product. The amount of output produced (Y) is '. _ a J , and the dollar value of output (P?) is The wage (W) Is is i, and the real wage (1'; 1| ls . (Note: The wage ls labor compensation measured in dollars, whereas the real wage is labor compensation measured in units of output.) What is the labor share (3%)? (Note: The labor share Is the fraction or the value of output that Is paid to labor.) In each of the following scenarios, calculate output (1"), the wage (W), the real wage (%J, and the labor share (g. Real Labor Output Wage Wage Share Sooner-in \"/1 {W} (3w) (EWLJ Ination Increases P from $2 to 153. J l5 l" _J' _" Tachnologlcal progress increases A from 3 to s. ' J [5- 1 I; _'r Capital accumulation increases if from 2,935,934 to I: __l [a _| L J _" 23,BB?,B?2. A plague decreases L from 13:8 to 216. s __f__ Despite mam;r changes In the US. economy over time, the labor share has been relatively stable. This observation v consistent with the Cobb-Douglas production function. Use the green line (triangle symbol) to graph the new labor-supply curve faced by Leadbelly Co. Leadbelly Co. 160 Demand 128 S . 112 S Wage 49 Quantity of Labor This change causes the marginal product of labor at Leadbelly to Grade It Now Save & Continue Continue without saThe Markets for the Factors of Production: Algorithmic End of Chapter 3. Problems and Applications Q3 Suppose that labor is the only input used by a perfectly competitive firm. The firm's production function is as follows: Complete the third column of the following table by calculating the marginal product for each additional worker. Value of the Marginal Product of Days of Units of Marginal Product of Labor Labor Output Labor (Dollars) 0 17 WN 24 VVVVVVV 0000000 DO00000 30 34 YOUA 36 36 Each unit of output sells for $8. Complete the fourth column of the preceding table by calculating the value of the marginal product of each worker. Complete the following demand schedule by indicating the maximum wage the firm would be willing to pay for each quantity of labor. Wage Quantity of Labor Demanded (Dollars per day of labor) (Days of labor) 7 HNW AUG Use the blue points (circle symbol) to graph the firm's labor-demand curve, given the demand schedule you just derived. Note: Remember to plot each point between the two integers. For example, when the number of days increases from 0 to 1, the value of the marginal product of for the first day of labor should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points.The Markets for the Factors of Production: Algorithmic End of Chapter 4. Problems and Applications Q4 Smiling Cow Dairy can sell all the milk it wants for $4 a gallon, and it can rent all the robots it wants to milk the cows at a capital rental price of $100 a day. It faces the following production schedule: Total Product Number of Robots (Gallons) 0 0 50 85 UAWN- 115 140 150 155 In what kind of market structure does the firm sell its output? O Monopolistically competitive O Perfectly competitive O Monopolistic O Oligopolistic In what kind of market structure does the firm rent robots? O Perfectly competitive O Monopolistic O Oligopolistic O Monopolistically competitive Complete the following table by computing the marginal product and the value of the marginal product for each additional robot. Total Product Marginal Product Value of the Marginal Product Number of Robots (Gallons) (Gallons) (Dollars) c 50 85 115 000000 nUAWNA 140 150 155 The firm should rent robots. Grade ItCENGAGE |MINDTAP Q Search this course The Markets for the Factors of Production: Algorithmic End of Chapter X Fewer college students major in architecture. (?) A- O Supply Demand Supply Wage Demand Quantity of Labor Architecture firms cut down on the purchase of computers and other equipments as budgets tighten.5. Problems and Applications Q5 1. Initial Demand and 2. Now Output Price 3. Crop Destruction Equilibrium STEP: 1 of 3 The nation of Ectenia has 80 competitive apple orchards, which sell apples at the world price of $2 per apple. The following equations describe the production function and the marginal product of labor in each orchard: Q = 80L - 12 MPL = 80- 2L where Q is the number of apples produced in a day, L is the number of workers, and MPL is the marginal product of labor. What is each orchard's labor demand as a function of the daily wage W? O L = 40- 0.25W OL= 80 - 2W O L = 40 - 0.5W O L = 3,200 - 20W What is the market's labor demand? O L = 80 - 20W O L = 3,200 - 20W O L = 40 -0.25W O L = 3,200 - 0.25W Ectenia has 1,200 workers who supply their labor inelastically. The equilibrium wage is $ per worker per day. Each orchard hires workers and makes a profit of $ per day. (Note: Assume that wages are the firm's only costs.) TOTAL SCORE: 0/9 Grade Step 1 (to complete this step and unlock the next step)The Markets for the Factors of Production: Algorithmic End of Chapter X Architecture firms cut down on the purchase of computers and other equipments as budgets tighten. A-Z O Supply Demand Supply Wage bongo Demand A+ Quantity of Labor Grade It Now Save & Contin