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Chapter 28: Q. b - For Critical Thinking (page 633)

Why might an employer choose not to hire some job candidates offering relatively high levels of marginal product if the price of the product the employer sells decreases considerably?

Short Answer

Expert verified

Pricing is the means by which a firm determines the price at which its products and services will be sold. The marginal product of a company is the extra output produced as a result of additional input placed into the company.

Step by step solution

01

Introduction.

Pricing is the process by which a company determines the price at which it will sell its products and services, and it may be part of the company's marketing strategy.

02

Marginal product.

A company's marginal product is the additional output produced as a result of additional input placed into the company. It is also known as marginal physical product.

In practice, this could refer to the additional doughnuts produced by a donut shop after they hire an additional employee.

03

Step3:

The following factors influence labour demand:

  • Productivity of labour
  • Technological advancements
  • changes in the number of businesses
  • Changes in the demand for a company's product.
  • Profitability of the company

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Most popular questions from this chapter

Take a look at the two panels of Figure 28-5. Explain why at the points labeled E1, U.S. firms might have an incentive to outsource labor services abroad. In addition, explain why the shifts in the demand curves to the positions denoted D2 occur in each panel.

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?

Suppose that until recently, U.S. firms that produce digital apps had been utilizing only the labor of qualified U.S. workers at a wage rate of \(35 per hour. Now, however, these firms have begun engaging in labor outsourcing to Russia, where qualified workers are available at a dollar wage rate of \)15 per hour. Evaluate the effects of this new U.S. app-labor outsourcing initiative on U.S. and Russian employment levels and wages.

A monopoly firm hires workers in a perfectly competitive labor market in which the market wage rate is \(20 per day. If the firm maximizes profit, and if the marginal revenue from the last unit of output produced by the last worker hired equals \)10, what is the marginal product of that worker?

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

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