平狄克微观经济学第六版第十四章课后答案(3)

平狄克微观经济学第六版课后答案

employing too much labor since the cost of labor is greater than the benefit of labor at

the margin, and are therefore producing too many cookies.

11. A firm uses both labor and machines in production. Explain why an increase in the average wage rate causes both a movement along the labor demand curve and a shift of the curve.

An increase in the wage rate causes an upward movement along the labor demand

curve. For any given marginal revenue product curve, the firm will find that they

want to hire fewer workers when the wage increases (an upward movement).

However, when the wage increases the marginal cost will increase which will reduce

desired output. When output falls, the firm will not need as many machines and the

marginal product of labor curve will shift to the left, assuming machines and labor

are complementary. This will also reduce the demand for labor.

1. Suppose that the wage rate is $16 per hour, and the price of the product is $2. Values for output and labor are in units per hour.

20

35

47

57

65

70

a. 0 1 2 3 4 5 6 Find the profit-maximizing quantity of labor.

From the information given above, calculate the marginal product of labor, the extra

output produced by hiring one more unit of labor, and then multiply by price to get

the marginal revenue product of labor. To find the profit-maximizing quantity of

labor, use the rule that the firm wants to hire labor only as long as the marginal

revenue product of labor is greater than the nominal wage, or up to the point where

the marginal revenue product of labor is equal to the nominal wage. From the

table below, the firm will hire 5 units of labor.

b. Suppose that the price of the product remains at $2 but that the wage rate

increases to $21. Find the new profit-maximizing quantity of labor.

The above table does not change for this part of the problem. However, the firm no

longer wants to hire 5 units of labor because the benefit of the 5th unit ($16 per hour)

is less than the cost of the 5th unit ($21 per hour). The firm would only hire 3 units