Question
Suppose that labor is the only input used by a perfectly competitive firm. The firm's production function is as follows: Days of LaborUnits of Output
Suppose that labor is the only input used by a perfectly competitive firm. The firm's production function is as follows:
Days of LaborUnits of Output
0 days 0 units
1 7
2 13
3 19
4 25
5 28
6 29
7 29
a. Calculate the marginal product for each additional worker.
b. Each unit of output sells for $10. Calculate the value of the marginal product of each worker.
c. Compute the demand schedule showing the number of workers hired for all wages from zero to $100 a day.
d. Graph the firm's demand curve.
e. What happens to this demand curve if the price of output rises from $10 to $12 per unit?
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