(a) Why does the labour demand curve slope downwards? (b) A garment factory’s production function is provided in the table.The gross profit per unit (difference between selling price and material cost, but not including the cost of labour) is $100. # Workers Output 1 20 2 36 3 48 4 56 5 60 6 62 (i) If the wage rate is $1,000 a week, how many workers should the factory hire? (ii) If a surge in popularity for the factory’s brand allows them to raise the product price such that the gross profit rises to $150, how many workers will the factory hire now? (iii) Calculate the number of garments produced in each of the two cases above.
(a) Why does the labour demand curve slope downwards? (b) A garment factory’s production function is provided in the table.The gross profit per unit (difference between selling price and material cost, but not including the cost of labour) is $100. # Workers Output 1 20 2 36 3 48 4 56 5 60 6 62 (i) If the wage rate is $1,000 a week, how many workers should the factory hire? (ii) If a surge in popularity for the factory’s brand allows them to raise the product price such that the gross profit rises to $150, how many workers will the factory hire now? (iii) Calculate the number of garments produced in each of the two cases above.
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 8P
Related questions
Question
(a) Why does the labour demand curve slope downwards?
(b) A garment factory’s production function is provided in the table.The gross profit per unit (difference between selling price and material cost, but not including the cost of labour) is $100.
| # Workers | Output |
| 1 | 20 |
| 2 | 36 |
| 3 | 48 |
| 4 | 56 |
| 5 | 60 |
| 6 | 62 |
(i) If the wage rate is $1,000 a week, how many workers should the factory hire?
(ii) If a surge in popularity for the factory’s brand allows them to raise the product price such that the gross profit rises to $150, how many workers will the factory hire now?
(iii) Calculate the number of garments produced in each of the two cases above.
Transcribed Image Text:Figure 8.21 illustrates the production function of the firm with labour as input. Recall
the production function describes the relationship between the firm's total output and
the factors of production (input).
Figure 8.21: Production Function
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12
10
8
6.
4
2
1
3
6.
8.
# Workers
# Toys/Hour
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