Author Question: At any wage rate, the quantity of welders willing to work is less than the quantity of tomato ... (Read 69 times)

mwit1967

  • Hero Member
  • *****
  • Posts: 501
At any wage rate, the quantity of welders willing to work is less than the quantity of tomato pickers. Why?
 
  What will be an ideal response?

Question 2

Why does a profit-maximizing firm hire labor up to the point where the value of marginal product equals the wage rate?
 
  What will be an ideal response?



ghepp

  • Sr. Member
  • ****
  • Posts: 361
Answer to Question 1

For the welder the cost of acquiring his or her skill is much higher than the cost incurred by the tomato picker. The cost of learning how to pick fruits and vegetables is so low that the supply of individuals who can do that activity is quite large. Welders must learn their trade on the job and/or through vocational training, which raises the costs of learning this skill and decreases the supply of welders.

Answer to Question 2

If a company stopped adding workers at the point where the wage rate was less than the value of marginal product of labor, the firm could hire more workers and its profit would increase. Why? Because the return from the workers, the value of marginal product, exceeds the cost of hiring the workers. Since the marginal product of labor decreases as more workers are employed, as more workers are added, the marginal product of labor and hence the value of marginal product decreases. Eventually the firm will reach the point at which the value of marginal product equals the wage rate. If still more workers are employed, then the wage the firm must pay the workers exceeds the value of marginal product. These workers would contribute losses to the firm. So only when the value of marginal product equals the wage rate can the firm not increase its profit by changing the quantity of workers it employs.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

Every flu season is different, and even healthy people can get extremely sick from the flu, as well as spread it to others. The flu season can begin as early as October and last as late as May. Every person over six months of age should get an annual flu vaccine. The vaccine cannot cause you to get influenza, but in some seasons, may not be completely able to prevent you from acquiring influenza due to changes in causative viruses. The viruses in the flu shot are killed—there is no way they can give you the flu. Minor side effects include soreness, redness, or swelling where the shot was given. It is possible to develop a slight fever, and body aches, but these are simply signs that the body is responding to the vaccine and making itself ready to fight off the influenza virus should you come in contact with it.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

Acute bronchitis is an inflammation of the breathing tubes (bronchi), which causes increased mucus production and other changes. It is usually caused by bacteria or viruses, can be serious in people who have pulmonary or cardiac diseases, and can lead to pneumonia.

Did you know?

Cutaneous mucormycosis is a rare fungal infection that has been fatal in at least 29% of cases, and in as many as 83% of cases, depending on the patient's health prior to infection. It has occurred often after natural disasters such as tornados, and early treatment is essential.

For a complete list of videos, visit our video library