Question
Suppose that labor is the only input used by a perfectly competitive firm that can hire workers for $50 per
day. The firm’s production function is as follows:
Days of Labor/Units of Output:
0/0, 1/7, 2/13, 3/19, 4/25, 5/28, 6/29, 7/29
c. Compute the demand schedule showing the number of workers hired for all wages from zero to $100 a day.
How Would this be done.
e. What happens to this demand curve if the price of output rises from $10 to $12 per unit?
Wouldn't the demand curve shift downward.
for c) you need more information, you need the price of the output. Can you assume the price is $10 per unit as suggested in e.?
Assuming output can be sold at 10 per unit, 1 worker can make $70 of output, 2 can make $130 (change=$60), 3 can make $190 (change=$60), and so on. Tada, graph the changes, and you have the firm's demand curve for workers. 100-70 hire zero, 70-60 hire 1, 60-30 hire 4, 30-20 hire 5, 20-00 hire 6.
e) if output price rises, firms will want to produce more, sow they will hire more labor, demand shifts outward.
Thank you for the information.
day. The firm’s production function is as follows:
Days of Labor/Units of Output:
0/0, 1/7, 2/13, 3/19, 4/25, 5/28, 6/29, 7/29
c. Compute the demand schedule showing the number of workers hired for all wages from zero to $100 a day.
How Would this be done.
e. What happens to this demand curve if the price of output rises from $10 to $12 per unit?
Wouldn't the demand curve shift downward.
for c) you need more information, you need the price of the output. Can you assume the price is $10 per unit as suggested in e.?
Assuming output can be sold at 10 per unit, 1 worker can make $70 of output, 2 can make $130 (change=$60), 3 can make $190 (change=$60), and so on. Tada, graph the changes, and you have the firm's demand curve for workers. 100-70 hire zero, 70-60 hire 1, 60-30 hire 4, 30-20 hire 5, 20-00 hire 6.
e) if output price rises, firms will want to produce more, sow they will hire more labor, demand shifts outward.
Thank you for the information.
Answers
23
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