Question

If the productivity of computer engineers increases, what will happen to the demand curve for computer engineers?

It will shift to the right.

The direction of the shift is ambiguous.

It will remain unchanged.

It will shift to the left.

Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for $1 each. Use the following table to answer this question:

Labor (number of workers)	Quantity (golf balls per day)	MPL	VMPL at $1 per golf ball
0	0	-	-
1	175	175	175
2	325	150	150
3	450	125	125
4	550	100	100
5	625	75	75
6	675	50	50

Assuming Davis Golf Balls, Inc. is a competitive, profit-maximizing firm, how many workers will the firm hire if this company pays a wage of $75 a day?

4 workers

5 workers

3 workers

6 workers

Use the following table to answer this question:

Labor (number of workers)	Quantity (golf balls per day)	MPL at 50 cents (golf balls per day)	VMPL at 50 cents per golf ball
0	0
1	100
2	175
3	225
4	250

Consider the following daily production data for Davis Golf Balls, Inc.  Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $50 a day.

What is the value of the marginal product of labor (VMPL) for the 3^rd worker?

$25

$100

$12.50

$50

Answer 1

If the productivity of computer engineers increases, then the demand for them will increase and demand curve for computer engineers will shift to the right.

Answer: Option (A)

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Labor (number of workers)	Quantity (golf ball per day)	MPL	VMPL at $1 per golf ball
0	0	---	----
1	175	175	175
2	325	150	150
3	450	125	125
4	550	100	100
5	625	75	75
6	675	50	50

MPL = change in quantity / change in labor.

VMPL = MPL * Price of output.

In perfect competition, the optimal number of labor demand at the following point.

VMPL = Wage

=> VMPL = Wage = $75 corresponding to 5 units of worker.

Hence, the firm would hire 5 units of worker.

Answer: Option (B)

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Labor (number of workers)	Quantity (golf ball per day)	MPL at 50 cents (golf per day)	VMPL at 50 cents per golf ball
0	0	---	----
1	100	100	50
2	175	75	37.5
3	225	50	25
4	250	25	12.5

MPL = change in quantity / change in labor.

VMPL = MPL * Price of output.

VMPL of the 3rd worker is 25.

Answer: Option (A)