« previous next »

Author Question: Explain why funds available to pay the fixed inputs are equal to the area of the triangle below the ... (Read 71 times)

fbq8i

  • Hero Member
  • *****
  • Posts: 527
on: Jun 30, 2018
Explain why funds available to pay the fixed inputs are equal to the area of the triangle below the value of marginal product of labor (VMP) and above the wage.

Question 2

Entry of new firms causes
 A) accounting profits to go to zero.
  B) market share to grown.
  C) economic profits to go to zero.
  D) total revenue to be maximized.


rnehls

  • Sr. Member
  • ****
  • Posts: 313
Reply #1 on: Jun 30, 2018
Answer to Question 1

The intersection of the VMP and the wage determines the number of workers to be hired. Hence the rectangular area bound by the wage and the number of workers employed at that wage rate give the firm's expenditure on its variable input, i.e. labor. The triangular area above the wage line and below the VMP is therefore the funds that the firm has left to use on its fixed inputs.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

Did you know?

Of the estimated 2 million heroin users in the United States, 600,000–800,000 are considered hardcore addicts. Heroin addiction is considered to be one of the hardest addictions to recover from.

Did you know?

Asthma occurs in one in 11 children and in one in 12 adults. African Americans and Latinos have a higher risk for developing asthma than other groups.

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

Rule of Nines. A method for determining percentage of body burned. Each different colored section re Rule of Nines. A method for determining percentage of body burned. Each different colored section re
Regions of the abdominopelvic area Regions of the abdominopelvic area
The Ventral Tegmental Area and the Nucleus Accumbens The Ventral Tegmental Area and the Nucleus Accumbens
The inguinal area. Take great care when applying deep pressure in this region The inguinal area. Take great care when applying deep pressure in this region
Reactions in assimilation of ammonia and major fates of the fixed nitrogen Reactions in assimilation of ammonia and major fates of the fixed nitrogen
How to verify that a triangle is a right angled triangle How to verify that a triangle is a right angled triangle
Video: Interview with Person having Obsessive Compulsive Disorder

For a complete list of videos, visit our video library