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 322 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
Thanks for the timely response, appreciate it

Kedrick2014

  • Member
  • Posts: 359
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

Elderly adults are at greatest risk of stroke and myocardial infarction and have the most to gain from prophylaxis. Patients ages 60 to 80 years with blood pressures above 160/90 mm Hg should benefit from antihypertensive treatment.

Did you know?

Since 1988, the CDC has reported a 99% reduction in bacterial meningitis caused by Haemophilus influenzae, due to the introduction of the vaccine against it.

Increasing Separation of Masters and Workers Increasing Separation of Masters and Workers
Ginkgo Biloba label. The label indicates the product is standardized to percentages of the two ... Ginkgo Biloba label. The label indicates the product is standardized to percentages of the two ...
The human eye, a product of 600 million years of evolution (Lamb, Collin, & Pugh, 2007). The human eye, a product of 600 million years of evolution (Lamb, Collin, & Pugh, 2007).
To find the derivative use product rule To find the derivative use product rule
An archaeological sample contains 0.700 g of lead-206 and 2.144 g of uranium-238. Assume that ... An archaeological sample contains 0.700 g of lead-206 and 2.144 g of uranium-238. Assume that ...
Specialized Workers: Honeypot Ant Specialized Workers: Honeypot Ant
Video: How to make cDNA Animation

For a complete list of videos, visit our video library