Analyze factor prices, labor demand and supply, MRP-based competitive hiring, least-cost input choice, monopsony wages and employment, and labor-market policies.
RKB is a profit-maximizing monopoly that produces a new, patented electronic device. RKB is earning positive economic profit.
Assume that RKB hires workers in a perfectly competitive labor market.
Draw a correctly labeled graph for the labor market, showing the equilibrium wage and quantity of labor, labeled and , respectively.
Suppose immigration increases the number of workers in this labor market. On your graph in part (d)(i), show the new equilibrium wage and quantity of labor, labeled and , respectively.
RKB uses the optimal combination of capital and labor in its production process. The firm rents capital at $500 per unit, and the last unit of capital rented has a marginal product of 2,500 units. If the marginal product of the last unit of labor hired is 1,000 units, calculate the wage rate. Show your work.
Begin your response to this question at the top of a new page in the separate Free Response booklet and fill in the appropriate circle at the top of each page to indicate the question number.
Voda Reservoir is a profit-maximizing firm and the only producer of bottled water in a country.
Currently, Voda Reservoir is earning negative economic profit.
Voda Reservoir hires workers in a perfectly competitive labor market.
If the demand for bottled water increases, what will happen to Voda Reservoir's demand for labor? Explain.
The government implements a new regulation that increases the minimum age required for a worker to be employed in a bottled-water factory. What will happen to the market wage in the short run? Explain.
The table provided shows the short-run production function for Lowen Feline, a profit-maximizing firm that produces cat food.
Lowen Feline sells as many bags of cat food as it wants at a market price of $ 10 per bag and hires as many workers as it wants at a market wage of $ 18.
Determine the profit-maximizing number of workers Lowen Feline will hire. Explain using marginal analysis.
Quartz Excavations is a profit-maximizing firm and the only employer of miners of quartz in a small town. The graph provided shows the labor market for miners.
Identify Quartz Excavations' profit-maximizing number of miners to hire.
Will Quartz Excavations pay its profit-maximizing number of miners a wage rate that is equal to $15, greater than $15, or less than $15? Explain using numbers.
Suppose the government sets a minimum wage (a price floor on wages) at . Calculate the total wage bill for Quartz Excavations at the resulting profit-maximizing number of miners.
Show your work.
Suppose that instead of a minimum wage, there is now an increase in the demand for quartz.
Will the marginal revenue product of miners increase, decrease, or remain the same?
Explain.
After the demand for quartz increases, Quartz Excavations hires the new profit-maximizing number of miners. Will the marginal factor cost of the last miner hired be greater than, less than, or equal to the marginal factor cost of the last miner hired before the demand for quartz increased?