What is the equilibrium wage

Assignment Help Microeconomics
Reference no: EM131018459

Practice Questions 9

Question 1:

Data for a pumpkin farmer who can hire pumpkin pickers at $9 per day is provided below:

# of pickers

Revenue from pumpkin sales

1

$30

2

$48

3

$62

4

$72

5

$80

6

$84

If the farmer maximizes profits, how many pumpkin pickers should he hire?

Question 2:

Two firms, A and B, operate in different but competitive industries. They both require labor with the same level of ability and skills and the labor market is also perfectly competitive. We know that the marginal product of labor for firm A is 8 and the marginal product of labor at firm B is 12. In addition, firm A faces a price of $6 per unit of output it produces. What should be the price at which firm B sells its product if both firms are maximizing their profits?

Question 3:

Suppose that East Ten is one of the shoemakers in the perfectly competitive market for shoes. The market demand for shoes is given by P = 100 - QD and the market supply is given by P = QS. The market for shoes is in long run equilibrium. East Ten employs workers in a perfectly competitive labor market which is characterized by the demand equation W = 1000 - 3L and the supply equation W = 2L. (Note: W stands for the weekly wage rate and L stands for the quantity of workers.) Identify the equilibrium wage rate and the number of workers employed by East Ten if its marginal product of labor is given by MPL = 30 - L.

Question 4:

Suppose that there is an automobile manufacturer and a catering firm in town which use labor with similar skill levels in production. Furthermore suppose that these two firms are the only employers in this particular labor market and they act as perfectly competitive firms in the labor market. The catering firm has the following labor demand equation: W = 100 - 5L while the automobile manufacturer has a labor demand curve given by W = 200 - 5L. If the residents supply labor according to the supply curve W = L + 10 , what is the equilibrium wage? What is the equilibrium quantity of workers employed? How many workers does each firm employ?

Multiple Choice Questions:

1. If both the output market and the labor market are perfectly competitive, then the firm should set ___________ to maximize profits.

a. P = W.MC
b. W = MP
c. MP = MC
d. W = MP.P
e. MP.P = ATC

2. Ed's Barber Shop is a small perfectly competitive firm that hires workers in a perfectly competitive labor market. Ed charges $10 per haircut, which is the prevailing market price. Marginal product of each worker is 2 haircuts per hour. What should Ed be paying as the hourly wage rate?

  • $10
  • $5
  • $15
  • $20
  • $2

3. The labor supply curve shifts to the right when

  • population increases.
  • workers realize they would rather stay at home and watch TV.
  • the wage rate increases.
  • workers realize watching TV does not pay off.
  • the number of firms increases.

Reference no: EM131018459

How the city of uruk was concerned the holy city

The animation does not show how Western tradition that refer to the Hebrew Bible that shows Gilgamesh and his kingdom as being the early human society or how the city of Uruk

How many degrees of freedom are associated with sse

Do the data present sufficient evidence to indicate a difference in the mean uptake of calcium for the three levels of digitalis? Do the data indicate a difference in the me

Calculate the optimal quantity and the consumer surplus

Let the inverse demand curve for tennis classes is: P = 90 - 1.5Q. If the equilibrium price is $15, calculate the optimal quantity and the consumer surplus. If price increase

Price increase as opposed to computing a price decrease

What method (formula) for computing price elasticity of demand gives you two dissimilar calculations when computing a price increase as opposed to computing a price decrease?

What impact do constitutional rights have on response

Analyze the role health policy lobbyists for special interest groups play in promoting health policy agendas. What regulations do you believe should be implemented that do n

Automotive industry history-swott analysis

Brief history of the automotive industry, an automotive industry overview, and a SWOTT (Strengths, Weaknesses, Opportunities, Threats, and Trends) analysis of the automotive

Effect on a certain company or market

Explain to the class how these barriers affect your company. If you prefer, you may find an article that tells a story about barriers to entry having an effect on a certain

Monetary transmission mechanism

Monetary Transmission Mechanism: According to the Keynesian school, show what happens, step by step, when the Federal Reserve sells US treasury bills to US banks. What is the

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd