This topic contains a solution. Click here to go to the answer

Author Question: Suppose there are profit maximizing, competitive buyers and sellers of labor in an industry, and the ... (Read 43 times)

Evvie72

  • Hero Member
  • *****
  • Posts: 519
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
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
YES! Correct, THANKS for helping me on my review


scottmt

  • Member
  • Posts: 322
Reply 3 on: Yesterday
Excellent

 

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

Malaria was not eliminated in the United States until 1951. The term eliminated means that no new cases arise in a country for 3 years.

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

Did you know?

Vaccines cause herd immunity. If the majority of people in a community have been vaccinated against a disease, an unvaccinated person is less likely to get the disease since others are less likely to become sick from it and spread the disease.

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

For a complete list of videos, visit our video library