12. The marginal productivity theory Which of the following points constitute the marginal productivity theory? Check all that apply. Marginal factor cost of a firm that is a factor price taker, is constant and equal to its factor price. Firms hire the factor quantity at which marginal revenue product equals marginal factor cost. Marginal revenue product of a perfectly competitive firm is greater than value marginal product. Marginal revenue product of a perfectly competitive firm equals value marginal product. Suppose that Lorenzo works for Clear Drop Co, a perfectly competitive firm producing water filters. Lorenzo was paid $4,000 but found a better job and quit Clear Drop. Since nothing else changed, Clear Drop's total revenue
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- Suppose you are given the following table (note: labor is the only variable input and all workers are paid equally): Labor Quantity Fixed Costs Variable Costs Total Costs 0 units $10 0 1 2 3 10 units 18 units 20 units $50 What is the value of this company's fixed costs? O a. $0 O b. $10 O C. $20 O d. $30 O e. $5012. The first two columns in the following table give a firm's short-run production func- tion when the only variable input is labor, and capital (the fixed input) is held constant at 5 units. The price of capital is $2,000 per unit, and the price of labor is $500 per unit. Cost Average cost Units of labor Units of Average Marginal output Marginal cost product product Fixed Variable Total Fixed Variable Total XX XX XX XX XX XX 20 4,000 40 10,000 60 15,000 80 19,400 100 23,000 a. Complete the table. b. What is the relation between average variable cost and marginal cost? Between av- erage total cost and marginal cost? c. What is the relation between average product and average variable cost? Between marginal product and marginal cost?The figure at right illustrates short-run cost curves for a firm. Based on this figure, which of the following is true? O A. A is the total cost curve, B is the marginal cost curve, and C is the total fixed cost curve. O B. A is the average variable cost curve, B is the total fixed cost curve, and C is the average total cost curve. O C. A is the total cost curve, B is the total variable cost curve, and C is the total fixed cost curve. O D. A is the total cost curve, B is the total variable cost curve, and C is the marginal cost curve. O E. A is the average variable cost curve, B is the average total cost curve, and C is the marginal cost curve. Quantity с
- The table below shows the short run production function for Corey's Card Store. Number of workers 1 2 3 4 5 6 7 8 Total product per hour 3 7 12 В І 16 19 21 22 20 A. After which worker do diminishing marginal returns begin for Corey's Card Shop? Explain using numbers. B. Assume Corey's Card Shop produces and sells greeting cards in a perfectly competitive market at a unit price of $9. Calculate the marginal revenue product of the 6th worker. Show your work. C. Corey's Card Shop hires labor in a perfectly competitive labor market for clerks at a wage of $25/hour and the market price of greeting cards remains $9. How many workers will Corey's Card Shop hire to maximize its profits? Explain using marginal analysis. D. Assume there is an increase in the demand for greeting cards in the market. What will happen to each of the following? i. The market wage rate. Explain. ii. The marginal revenue product curve for Corey's Card Shop. Explain.Cost 8 Firm A Firm C FIGURE 8-1 O O O LRAC Output LRAC Output Cost Cost Firm B Firm D LRAC Output LRAC Output 4 Refer to Figure 8-1. For which of the four firms would the family of short-run average total cost curves lie below the LRAC? 选择一项: O A. Firm A O B. Firm B C. Firm C D. Firm D E. none of the four firms3. Suppose that labor is the only input used by a perfectly competitive firm. The firm's production function is as follows: Days of Labor 0 days 2 Units of Output 0 units L 118 119 4 a Calatane dhe marginal product of each additional worker. h. Each unit of output sells for $10. Calculate the value of the marginal product of
- 7. You are the manager of a firm that uses only labor and capital to produce your product. Assume you hire labor and you rent capital equipment in a very competitive market. You pay your employees at a wage rate of $20 per hour and you rent capital at $25 per hour. Assume the marginal product of labor is 50 units of output per hour and the marginal product of capital is 80 units of output per hour. Based on these given information, clearly explain if you should increase, decrease, or leave unchanged the amount of capital used in your production process.Variable Input 1 Variable Input 2 Fixed Input $30 $20 $40 Price A Marginal Product 60 B Suppose you are the manager of Super Suds, a large manufacturer of laundry detergent that uses two variable inputs and one input that is fixed in the short-run. Refer to the table above. In the short run, if A = 40 and B = 40, which of the following is true? Select one: O A. You should buy more of Input 1 and less of Input 2. O B. You should buy more of Input 2 and less of Input 1. OC. You should buy less of the Fixed Input. O D. Your firm is minimizing costs.Betsy's Bangles produces and sells woven bracelets. The table shows information about the number of workers employed, daily bracelet production, and the marginal product of labor (MPL). Use this to answer the questions. You must calculate the bracelet values that are absent to answer the question. How many bracelets can be produced by 5 workers? bracelets from 5 workers: Workers 0 1 2 3 4 5 Bracelets 0 1 * 39 * * MPL www 1 26 12 8 4 bracelets
- Question 19 widget-manufacturing The production function for a firm is given by q = 9K0.5L0.5, where q is the number of widgets produced each hour, K is the number of specialized staplers (which is fixed at 4 in the short run), and L is the number of employees. What is the marginal product of labor at L = 9? O 18 O 3 none of the above1. Assume that Ms. Desdimona, the owner, and manager of the Fine Duplicating Service located near your university and she is seeking to fill a vacant position. Should she be more concerned with the average product of labor or the marginal product of labor for the last person hired? If she observes that average product is just beginning to decline, should she hire any more workers? She estimates that the additional workers would generate the following output. What does this situation imply about the marginal product of your last worker hired? State how the law of diminishing returns is reflected in the shape of the total product curve and indicate the relationship between diminishing marginal return and the stages of the production. How would you determine the various stages of production from this table? Explain intuitively what might cause the marginal product of labor to be negative. Workers Hired 1 4 5 7 8 Total Product (Q) 12 22 30 36 40 40 37 32 6, 3. 2.Green Bank employs three loan officers, each working eight hours per day. Each officer processes an average of five loans per day. The bank's payroll cost for the officers is $820 per day, and there is a daily overhead expense of $500. labor and multifactor productivity will be: Select one: O a. labor productivity 0.625, multifactor productivity 0.0113. O b.labor productivity 0.630, multifactor productivity 0.0125. O . labor productivity 0.640, multifactor productivity 0.0135. d. Non of choices.