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 41 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
Great answer, keep it coming :)

isabelt_18

  • Member
  • Posts: 342
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

Russia has the highest death rate from cardiovascular disease followed by the Ukraine, Romania, Hungary, and Poland.

Did you know?

About 3% of all pregnant women will give birth to twins, which is an increase in rate of nearly 60% since the early 1980s.

Did you know?

HIV testing reach is still limited. An estimated 40% of people with HIV (more than 14 million) remain undiagnosed and do not know their infection status.

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates's recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Wages and Machines in the Textile Industry, 1910 Wages and Machines in the Textile Industry, 1910
Project Management: Achieving Competitive Advantage, 5th Edition Project Management: Achieving Competitive Advantage, 5th Edition
Strategic Management and Competitive Advantage: Concepts and Cases, 6th Edition Strategic Management and Competitive Advantage: Concepts and Cases, 6th Edition
The profit, p(t), made at a fair depends on the price of the ticket, t. The profit is modelled ... The profit, p(t), made at a fair depends on the price of the ticket, t. The profit is modelled ...
Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ... Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ...
Three queens, fertile females in species that have a reproductive division of labor. Three queens, fertile females in species that have a reproductive division of labor.
Video: Introduction to Sickle Cell Anemia

For a complete list of videos, visit our video library