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

Author Question: Assume that an employer discovers that the marginal revenue product of the last two workers that he ... (Read 79 times)

09madisonrousseau09

  • Hero Member
  • *****
  • Posts: 559
on: Jun 29, 2018
Assume that an employer discovers that the marginal revenue product of the last two workers that he has hired is less than the wage rate that he is paying them.
 
  He is operating in a purely competitive market in both the output that he sells and the labor that he hires. What would you advise this employer to do and why?

Question 2

Explain why an employer in a perfectly competitive market will hire more workers when the marginal revenue product is greater than the wage.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

essyface1

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Jun 29, 2018
Answer to Question 1

It would be advisable if this employer laid off these two workers. The reason is that the wage rate in a competitive market is the same as the marginal cost of labor. Since these two workers are not paying their way laying them off will increase the profitability of the firm or lower its losses.

Answer to Question 2

The marginal revenue product represents the value of hiring the worker to the firm. It is the additional revenue that the firm gains from hiring the worker. If the gain is greater than the cost of hiring the worker (which is the wage in a competitive labor market), the firm will increase its profits by hiring the additional worker.


09madisonrousseau09

  • Member
  • Posts: 559
Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

FergA

  • Member
  • Posts: 352
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Urine turns bright yellow if larger than normal amounts of certain substances are consumed; one of these substances is asparagus.

Did you know?

Opium has influenced much of the world's most popular literature. The following authors were all opium users, of varying degrees: Lewis Carroll, Charles, Dickens, Arthur Conan Doyle, and Oscar Wilde.

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Did you know?

Approximately one in four people diagnosed with diabetes will develop foot problems. Of these, about one-third will require lower extremity amputation.

Rivers Are a Product of Their Watersheds Rivers Are a Product of Their Watersheds
During the Pullman strike in Chicago, workers protesting wage cuts did $340,000 in property damage, During the Pullman strike in Chicago, workers protesting wage cuts did $340,000 in property damage,
Dolores Huerta and Cesar Chavez, leaders of the United Farm Workers, discuss their 1968 strike of ... Dolores Huerta and Cesar Chavez, leaders of the United Farm Workers, discuss their 1968 strike of ...
Average Hourly Earnings of U.S. Workers in Current and Constant Dollars Average Hourly Earnings of U.S. Workers in Current and Constant Dollars
To find the derivative use product rule To find the derivative use product rule
Specialized Workers: Soldier Termite Specialized Workers: Soldier Termite
Video: Role of transport in a cell

For a complete list of videos, visit our video library