This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Suppose there are profit maximizing, competitive buyers and sellers of labor in an industry, and the ... (Read 38 times)

Evvie72

  • Hero Member
  • *****
  • Posts: 519
on: Jul 1, 2018
Suppose there are profit maximizing, competitive buyers and sellers of labor in an industry, and the amount of capital is fixed for each firm. Explain under what condition the output price will equal the wage rate.
 
  What will be an ideal response?

Question 2

If a firm hires one worker and eliminates four units of capital, and hires one more worker and replaces three more units of capital, keeping output constant, then
 
  A) workers and capital are perfect substitutes.
  B) the firm is operating inefficiently because capital is more efficient than workers.
  C) the firm is experiencing a diminishing marginal rate of technical substitution.
  D) there are decreasing returns to scale.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

peter

  • Sr. Member
  • ****
  • Posts: 330
Reply #1 on: Jul 1, 2018
Answer to Question 1

The profit-maximizing buyer of labor sets the output price equal to the marginal cost of producing an additional unit of output. The marginal cost of output when capital is fixed equals the wage rate divided by the marginal product of labor. If the marginal product of labor equals one, then the output price will equal the wage rate.

Answer to Question 2

C


Evvie72

  • Member
  • Posts: 519
Reply 2 on: Jul 1, 2018
:D TYSM

connor417

  • Member
  • Posts: 329
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

According to the CDC, approximately 31.7% of the U.S. population has high low-density lipoprotein (LDL) or "bad cholesterol" levels.

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

Did you know?

Most childhood vaccines are 90–99% effective in preventing disease. Side effects are rarely serious.

Did you know?

In women, pharmacodynamic differences include increased sensitivity to (and increased effectiveness of) beta-blockers, opioids, selective serotonin reuptake inhibitors, and typical antipsychotics.

Astronaut Piers Sellers during the third spacewalk of STS-121, a demonstration of orbiter heat shiel Astronaut Piers Sellers during the third spacewalk of STS-121, a demonstration of orbiter heat shiel
Nanomaterials Applications and Industry Used Nanomaterials Applications and Industry Used
North Korea: Labor Issues North Korea: Labor Issues
North Korea: Labor Issues North Korea: Labor Issues
Kyoto Protocol encourages industry to innovate and reduce the level of emissions Kyoto Protocol encourages industry to innovate and reduce the level of emissions
A highway curve of radius 80 m is banked at 45°. Suppose that an ice storm hits, and the ... A highway curve of radius 80 m is banked at 45°. Suppose that an ice storm hits, and the ...
Video: Introduction to filtration - filtrate formation and composition

For a complete list of videos, visit our video library