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Chapter 28: Q. 28-1 (page 645)

The following table depicts the output of a firm that manufactures computer printers. The printers sell for $100each.

Labor Input
(workers per week)		 Total Output
(printers per week)
10 200
11 218
12 234
13 248
14 260
15 270
16 278

Calculate the marginal product and marginal revenue product at each input level above 10 units.

Short Answer

Expert verified

The change in total physical output divided by the change in labour input equals marginal physical product.

Step by step solution

01

step 1  Introduction

The production of a company that makes computer printers is shown in the table below.

The marginal physical product and marginal revenue product have been determined.

Labor Input

(workers per week)

Total Physical

Output

(printers per week)


Marginal Physical

Product


Marginal Revenue Product ($)


10 200 - -
11 218 18 1800
12 234 16 1600
13 248 14 1400
14 260 12 1200
15 270 10 1000
16 278 8 800

The Labor Input, Total Physical Output, Marginal Physical Product (MPP), and Marginal Revenue Product are all represented in the table above (MRP).

02

step 2  Explanation

  • The change in total physical output divided by the change in labour input equals marginal physical product.
  • The price into MPP equals the marginal revenue product.
  • The printer costs $100 per unit in this case.

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Most popular questions from this chapter

Recently, Swedish companies have outsourced manufacturing labor previously performed by Swedish workers at \(20 per hour to U.S. workers who receive a wage rate of \)10 per hour. Evaluate the effects of Swedish manufacturing-labor outsourcing on Swedish and U.S. employment levels and wages.

The current market wage rate is \(10, the rental rate of land is \)1,000per unit, and the rental rate of capital is $500. Production managers at a firm find that under their current allocation of factors of production, the marginal product of labor is 100, the marginal product of land is 10,000, and the marginal product of capital is 4,000. Is the firm minimizing costs? Why or why not?

Why would increased use of robotic sewing machines on the part of a clothing manufacturer cause the marginal product derived from utilization of these machines to decline?

Refer back to your answers to Problem 28-1 in answering the following questions.

a. What is the maximum wage the firm will be willing to pay if it hires 15 workers?

b. The weekly wage paid by computer printer manufacturers in a perfectly competitive market is $1200. How many workers will the profit-maximizing employer hire?

c. Suppose that there is an increase in the demand for printed digital photos. Explain the likely effects on marginal revenue product, marginal factor cost, and the number of workers hired by the firm?

Since the beginning of this century, there has been a significant increase in the price of corn-based ethanol.

a. A key input in the production of com-based ethanol is com. Use an appropriate diagram to explain what has likely occurred in the market for corn if the supply curve has not shifted.

b. In light of your answer to part (a), explain why many hog farmers, who in the past used corn as the main feed input in hog production, have switched to cookies, licorice, cheese curls, candy bars, and other human snack foods instead of corn as food for their hogs.
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