Question
Consider a company operating in a competitive market. The company sells units of output and receives a price of $30 per unit, and pays a
Consider a company operating in a competitive market. The company sells units of output and receives a price of $30 per unit, and pays a daily market wage of $285 to each worker it employs.
In the following table, complete the column for the value of the marginal product of labor (VMPL) at each quantity of workers.
Labor | Output | Marginal Product of Labor | Value of the Marginal Product of Labor |
---|---|---|---|
(Number of workers) | (Units of output) | (Units of output) | (Dollars) |
0 | 0 | ||
16 | |||
1 | 16 | ||
15 | |||
2 | 31 | ||
14 | |||
3 | 45 | ||
11 | |||
4 | 56 | ||
8 | |||
5 | 64 | ||
On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.)
Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points.
500 O 450 Demand 400 350 300 Market Wage Rate 250 WAGE (Dollars per worker) 200 150 100 50 0 2 3 4 5 LABOR (Number of workers)Step by Step Solution
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