posted by sue
Need some help with these questions....Thanks in advanced.
All profit-maximizing firms hire inputs up to the point where:
A) MRP = W
B) MR = MC
C) MP = W
D) MFC = MRP
E) MFR = MRC
4) A firm’s marginal revenue product of labor curve
A) is steeper than its demand curve for labor.
B) is more elastic that its demand curve for labor.
C) lies below the firm’s demand curve for labor.
D) is equal to the firm’s demand curve for the product that labor can produce.
E) is the same as its demand curve for labor.
5) We assume that when a firm hires additional workers the marginal physical product of labor will
A) increase because more workers can always get more work done.
B) decrease because the new workers are likely to be less able than the previously hired ones.
C) not change because of the ceteris paribus assumption.
D) increase because large firms are more efficient.
E) decrease because each worker now has less capital and other resources to work with.
6) A firm's marginal factor cost describes
A) the increase in the firm's total revenue as one more unit of output is sold.
B) the change in total fixed cost which results from hiring one more unit of input.
C) the change in total variable cost which results from the production of an extra unit of output.
D) the change in total cost which results from using one more unit of an input.
E) the change in average total cost which results from selling one more unit of an input.
7) A change in the price of a resource will cause a change in the:
A) demand for the resource.
B) supply of the resource.
C) quantity demanded of the resource.
D) demand for the good the resource produces.
E) quantity supplied of the good the resource produces.
8) Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:
A) increase both labor and capital proportionally to meet the cost minimization condition.
B) decrease both labor and capital proportionally to meet the cost minimization condition.
C) increase labor and reduce capital to meet the cost minimization condition.
D) increase capital and reduce labor to meet the cost minimization condition.
E) increase or decrease capital or reduce or increase labor to meet the minimization condition.
Sue: Do a little research, and then take a shot. What do you think. Let the Jiskha volunteers help you guide your thinking rather than do the homework for you.
5) decrease. I like E better than B
Take it from here. Repost if you have questions, but tell us what you think.
I am not looking for someone to do my work for me. I am just trying to see if I am on the right track. I have answered these questions already I am just double checking my work.
For #1 I got
"A"-because a firm will hire up to the point MRP equals the wage rate anything after that is a loss. Am I correct?
I see you got MFR=MRC can you explain?
Sue: good point, but I still stand by my answer. In a competitive labor market, the wage rate IS the marginal factor cost. That is, W=MFC. MFC would be the correct answer when MFC does not equal the wage rate. This would occur, for example, if a firm that wants to hire has to offer a wage that is higher than what it already pays its current workers. To hire the marginal worker, the firm must pay W and raise the wages of the already hired workers to W as well. Here MFC>W. (Its the same logic we use for a monopolist to explain why P>MR)
Since you asked:
6) I think D
7) I think D
8) I think C
I got "C" for #7. Wouldn't that be a movement along the demand curve (quantity Demanded)?
Right C, that's what I thought too. Why did I say 'D'??? My bad, and good job....
Opportunity cost for Michelle:
500 lbs of Potatoes per year
50 chickens per year
Solve using line by line calculations
Opportunity cost for James:
80 lbs of Potatoes per year
40 Chickens per year
Solve using line by line calculations
Who has absolute advantage in which activity?
Which one has comparative?
Suppose that they are thinking of each specializing completely in the area in which they have a comparative advantage, and then trading at a rate of 2.5 pounds of potatoes for 1 chicken, would they each be better off? Explain.
How would you extend the above narrative to businesses, society as a whole or nations? Explain.
yes, both would be better off after specialization and trade. If they trade at a rate of 2.5 pounds of potatoes for 1 chicken, each would be better off. Michele could give up 50 pounds of potatoes to gain 20 chickens. Michele would consume 150 pounds of potatoes and 20 chickens. After trade, she would be able to consume 30 pounds of potatoes more than she was self sufficient. James would give up 20 chickens to gain 50 pounds of potatoes. James would consume 50 pounds of potatoes and 20 chickens. After trade, he would be able to consume 10 pounds of potatoes more than he was able to consume when he was self sufficient.