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Economics Assignment

Content type
User Generated
Subject
Economics
School
Grantham
Type
Homework
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Labor and Wages
The following chart provides information on a firm that hires labor competitively and sells
its product in a competitive market.
Units of
Labor
Total
Output
Product Price
1
14
$5
2
26
$5
3
37
$5
4
46
$5
5
53
$5
6
58
$5
a. How many units of labor would be employed if the market wage rate were
$40? Why?
An organization will keep on to hiring additional labor until there is greater MRP
than the hiring labor cost. If the market wage rate were $40, 4 labor units will be
employed, as the MRP at that point would be $45 that is higher as compared to
the wage rate of $40.
b. What would happen to employment if the wage rate rose to $50? Explain your
answer.
With an increase in wage rate to $50, hiring labor cost will also increase and it
will lead the organization to cut its employment from 4 to 3 labor units. There
would be MRP of $45 if the organization keep on to hiring the 4 labor units This
MRP would below the hiring labor cost. Consequently, 3 labor units will be
employed by the organization. At this point, the MRP would be higher than the
hiring labor cost, i.e. MRP = $55.

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Labor and Wages The following chart provides information on a firm that hires labor competitively and sells its product in a competitive market. Units of Labor Total Output Product Price 1 14 $5 2 26 $5 3 37 $5 4 46 $5 5 53 $5 6 58 $5 a. How many units of labor would be employed if the market wage rate were $40? Why? An organization will keep on to hiring additional labor until there is greater MRP than the hiring labor cost. If the market wage rate were $40, 4 labor units will be employed, as the MRP at that point would be $45 that is higher as compared to the wage rate o ...
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