CHAPTERS 16 and 17 READING OUTLINE 1. Explain derived demand. 2. Define and give the equations for: 2.1.Marginal product (MP) 2.2.Marginal revenue product (MRP) 2.3.Marginal resource cost (MRC) 3. Explain the rule for determining the optimal resource use for a single resource or input and determine the optimal amount of labor, given that each output sells at $2 and labor is $26 per unit. Outpu Labor t MP 0 0 *** 1 22 2 38 3 52 4 62 5 70 MRP *** MRC *** 4. Explain why the marginal revenue product (MRP) schedule of a resource is the firm's demand schedule for the resource in a purely competitive product market. 5. List the three determinants of demand for a resource and explain how a change in each of the determinants would affect the demand for the resource. 6. Explain the rule for determining the optimal use of a multiple resources when minimizing costs, then determine the least cost manner of producing 138 units of output given that the price of labor is $4 and the price of capital is $8 Labor MPL MPL /PL Capita MPK MPK /P l 1 2 3 4 5 7. 24 16 12 8 4 K 1 2 3 4 5 40 30 28 10 5 Explain the rule for optimal resource use to maximize a firm's profits. 8. If the price of output sells for $0.80 each, determine the profit maximizing quantities of labor and capital that should be used, assuming the price of labor is $4 and the price of capital is $8. If labor and capital are the only inputs, compute the profit of this firm. Labo r MPL 1 24 2 16 3 12 4 8 5 4 MRPL MRPL/PL Capita l MPK 1 40 2 30 3 28 4 10 5 5 MRPK MRPK/PK 9. Explain the difference between nominal and real wages. 10.Explain what factors have contributed to increasing real wages over time. 11.Discuss the impact of labor unions on the labor market. 12.Present the major points in the cases for and against the minimum wage. 13.Explain the demand and supply factors that create wage differentials. 14.Describe briefly salary systems in which pay is linked to performance (pay for performance) rather than to time. 15. Give one example of how the principles in this chapter currently impact your life or relate to your chosen career