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

Author Question: Suppose there are profit maximizing, competitive buyers and sellers of labor in an industry, and the ... (Read 40 times)

Evvie72

  • Hero Member
  • *****
  • Posts: 519
on: Jul 1, 2018
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
Reply #1 on: Jul 1, 2018
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
Excellent

adammoses97

  • Member
  • Posts: 337
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

Did you know?

There are immediate benefits of chiropractic adjustments that are visible via magnetic resonance imaging (MRI). It shows that spinal manipulation therapy is effective in decreasing pain and increasing the gaps between the vertebrae, reducing pressure that leads to pain.

Did you know?

Giardia is one of the most common intestinal parasites worldwide, and infects up to 20% of the world population, mostly in poorer countries with inadequate sanitation. Infections are most common in children, though chronic Giardia is more common in adults.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

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.

competitive inhibition competitive inhibition
Child Labor Rates and GDP Worldwide Child Labor Rates and GDP Worldwide
The proportion of adults 55 to 64 in the labor force in Germany, Italy, and France is low and has ... The proportion of adults 55 to 64 in the labor force in Germany, Italy, and France is low and has ...
Wages and Machines in the Textile Industry, 1910 Wages and Machines in the Textile Industry, 1910
Efficient Allocation of Labor between Sectors Efficient Allocation of Labor between Sectors
Labor Labor
Video: Cardiac Cycle (Part 4 of 4)

For a complete list of videos, visit our video library