Question
In: Economics
1. Suppose you are researching a firm that dominates the labor market in a small town....
1. Suppose you are researching a firm that dominates the labor market in a small town.
a. What is the significance of studying this firm's resource pricing (for local people, for the firm itself, etc.)?
b. In the context of derived demand, why might it be important for workers at the firm that the firm's product has strong market performance?
c. Now assume the firm decides to increase employment by 1,000 workers. What does this decision reveal about the firm's marginal revenue product (MRP) and marginal resource cost (MRC)?
d. Next, assume the price for capital goods that the firm buys decreases. If capital goods and labor are substitute resources, what might this do to the firm's demand for workers?
e. If the firm's MRPL= $40, PL = $10, MRPC = $200; PC = $200, is it maximizing its profits? If not, state which resource(s) should be used in larger amounts and which resource(s) should be used in smaller amounts.
f. Finally, suppose there is mass migration into the small town where the firm operates. Due to the resulting increase in labor supply, what will happen to the firm's quantity of workers demanded? In this case, will the substitution effect and output effect move in the same direction or in opposite directions? Why?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose you are researching a firm that dominates the labor market in a small town. a....
Suppose you are researching a firm that dominates the labor
market in a small town.
a. What is the significance of studying this firm's resource
pricing (for local people, for the firm itself, etc.)?
b. In the context of derived demand, why might it be important
for workers at the firm that the firm's product has strong market
performance?
c. Now assume the firm decides to increase employment by 1,000
workers. What does this decision reveal about the firm's marginal...
1. You are a nurse working in a labor and delivery unit in a small town...
1. You are a nurse working in a labor and delivery unit in a
small town near a Native American reservation. Charity, your
patient, is about to give birth to her sixth child. Her family does
not have health insurance. Normally she would give birth at home;
however, her blood pressure is high. Her family is doing a dance to
scare away the evil spirits that brought about this medical
condition. She is in a lot of pain but refuses...
1. You are a nurse working in a labor and delivery unit in a small town...
1. You are a nurse working in a labor and delivery unit in a
small town near a Native American reservation. Charity, your
patient, is about to give birth to her sixth child. Her family does
not have health insurance. Normally she would give birth at home;
however, her blood pressure is high. Her family is doing a dance to
scare away the evil spirits that brought about this medical
condition. She is in a lot of pain but refuses...
Suppose that a small town has six burger shops whose respective shares of the local market...
Suppose that a small town has six burger shops whose respective
shares of the local market are (as percentages of all hamburgers
sold): 26%, 20%, 18%, 14%, 12%, 10%,
a) What is the four-firm concentration ratio of
the hamburger industry and what is the Hirchmann Herfindahl
Index (HHI) for the hamburger industry in this
town?
b) Assume that the largest producer now purchases the third
largest firm (based market share) so that this new combined firm
has the same market...
Suppose you are studying the market for employees in a given competitive labor market in the...
Suppose you are studying the market for employees in a given
competitive labor market in the US. The labor supply is given by:
Supply : w = L+2 where w is the wage per hour worked and L is the
number of employees in thousands. The demand for labor in this
industry is given by: Demand : w = 20 − L, with L the number of
employees in thousands.
(a) Based solely on the information given, can leisure be...
Suppose we have a competitive labor market. What is the marginal benefit to the firm...
Suppose we have a competitive labor market.
What is the marginal benefit to the firm of hiring another
worker? Explain why.
What is the marginal cost to the firm of hiring another
worker?
How does the firm decide how many workers to hire in the short
run?
In the long run, capital is no longer fixed Explain how this
changes the labor decision for the firm.
What is the main difference between labor demand in the short
run and...
1. Suppose you are the Manager of a firm which employs both capital and unskilled labor and...
1. Suppose you are the Manager of a firm which
employs both capital and unskilled labor and pays that labor the
current Federal minimum wage of $7.25 per hour. With the
isoquant and isocost tools of economics explain the effects on your
firm and/or what you would do when President Joe Biden (help us,
Lord!) and his Democrat buddies in Congress increase the minimum
wage to, say, $15 per hour.
2. a. What is the difference between
economies of scale and returns to scale?...
Suppose you work for a firm and you notice that the marginal product of labor is...
Suppose you work for a firm and you notice that the marginal
product of labor is decreasing as more labor is hired. Does this
mean that the average product of labor must be decreasing too?
Provide a reasoning for your response.
Suppose the market demand and supply for labor hours in a segment of a labor market...
Suppose the market demand and supply for labor hours in a
segment of a labor market affected by a minimum wage in a certain
state is given by the table below.
Labor Hours Demanded
Hourly Wage
Labor Hours Supplied
72
$10
85
73
$9
80
75
$8
75
77
$7
70
79
$6
65
81
$5
60
Using the graph below, show the equilibrium wage and hours of
labor in this market.
Suppose the state government sets a minimum wage...
Compared to a competitive labor market, a firm with monopsony power in the labor market would...
Compared to a competitive labor market, a firm with monopsony
power in the labor market would pay a
A. higher wage rate and hire more workers.
B. higher wage rate and hire fewer workers.
C. lower wage rate and hire more workers.
D. lower wage rate and hire fewer workers.
E. lower wage rate but hire the same amount of workers.
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