Suppose that the marginal product of labor (MPL) of the workers in Betty's cookie factory is given by the following schedule: MPL Number of Person Hours/Week 0-100 101-200 201-300 301-400 401-500 501-600 600+ -NW 7 3.5 4 3 2 1 0 a. (10 points) If the price of a cookie is $2, and the market wage is $5/hr, how many hours of labor will be demanded each week? What if the market wage is $7.50/hr? $10/hr? $12.50/hr? S15/hr? $17.50/hr? $20/hr? Put these results in a table. This is called a labor demand schedule. b. (5 points) If the market wage is $7.50/hr, how many cookies will Betty produce each week? c. (10 points) After a great write-up in the local paper, everybody wants a Betty's cookie. Betty can not keep them in stock, so she raises the price of each cookie to $3. What is the new labor demand schedule? How many cookies does she now sell each Week, assuming that the wage does not change? d. (10 points) At a cocktail party celebrating her success, Betty meets Roger, a specialist in industrial organization Between bites of one of her Chocolate Chunkers, he makes some suggestions as to how she might organize her factory more efficiently Betty implements Roger's ideas which doubles the output of each worker. What is the new labor demand schedule if the price is still $3/cookie? Assuming that the market wage is still $7.50/hr, how many cookies will she now sell cach week? Suppose that the marginal product of labor (MPL) of the workers in Betty's cookie factory is given by the following schedule: MPL Number of Person Hours/Week 0-100 101-200 201-300 301-400 401-500 501-600 600+ -NW 7 3.5 4 3 2 1 0 a. (10 points) If the price of a cookie is $2, and the market wage is $5/hr, how many hours of labor will be demanded each week? What if the market wage is $7.50/hr? $10/hr? $12.50/hr? S15/hr? $17.50/hr? $20/hr? Put these results in a table. This is called a labor demand schedule. b. (5 points) If the market wage is $7.50/hr, how many cookies will Betty produce each week? c. (10 points) After a great write-up in the local paper, everybody wants a Betty's cookie. Betty can not keep them in stock, so she raises the price of each cookie to $3. What is the new labor demand schedule? How many cookies does she now sell each Week, assuming that the wage does not change? d. (10 points) At a cocktail party celebrating her success, Betty meets Roger, a specialist in industrial organization Between bites of one of her Chocolate Chunkers, he makes some suggestions as to how she might organize her factory more efficiently Betty implements Roger's ideas which doubles the output of each worker. What is the new labor demand schedule if the price is still $3/cookie? Assuming that the market wage is still $7.50/hr, how many cookies will she now sell cach week
