Suppose the wage increase, show that in the long run the firm will hire fewer workers. Decompose (analyze) the employment change into substitution and scale effect (use graph)
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- What is economics of scaleThe production function expressed in the table below represents the amount of hot dogs Hot Dog on a Stick makes during a lunch hour based on the number of workers. Calculate the marginal product of the 8th worker. # of Workers 7 8 9 10 Hot Dogs Produced 83 97 110 107The production function expressed in the table below represents the amount of hot dogs Hot Dog on a Stick makes during a lunch hour based on the number of workers. Calculate the marginal product of the 8th worker. 7 97 # of Workers 10 Hot Dogs Produced 83 110 107 Provide your answer below: hot dogs produced
- What is technical rate of substitution? Show it graphically.GM cuts jobs at its Australian manufacturing unit GM will cut 500 jobs, or about 12% of its workforce, at its Australian plant because of a sharp fall in demand for its locally-made "Cruze" small car. Source: The Wall Street Journal, April 8, 2013 As GM cuts its workforce, how will the marginal product and average product of a worker change in the short run? Suppose that before the cuts the marginal product of GM workers is below their average product. As the number of workers decreases, the marginal product of a GM worker and the average product of a GM worker in the short run. increases; decreases does not change; does not change decreases; decreases increases; increases decreases; increasesworkers ouput marginal product total cost average total cost marginal cost 0 0 0 200 0 $0 1 20 20 300 $15 $5 2 50 30 400 $8 $3.33 3 90 40 500 $5.56 $2.50 4 120 30 600 $5 $3.33 5 140 20 700 $5 $5 6 150 10 800 $5.33 $10 7 155 5 900 $5.8 $20 can you explain diminishing marginal product based on these numbers?
- The graph shows one of a firm's isoquants (blue line) and one of a firm's isocost lines (dashed red line). 92 Based on this informatin, this firm's MRTS Because of this, the firm should produce with is always greater; all labor and no capital is always greater; all capital and no labor is always less; all capital and no labor is always less: all labor and no capital L than the ratio of the input prices. to cost-minimize.Fill in the blanks: 80 60 ●A BD 60 80 120 Units of labor The firm is currently along isocost CE. If the price of capital is 30, then the price of labor is Units of capitalWill decrea n he fong run, assume a firm uses both labor and capital to produce 25 units of output. The marginal product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of output, what must be the unit price of capital?
