1. The link between resource and product markets The following graph represents the labor market in the accounting industry in a hypothetical economy. Suppose the board of accountancy loosens the qualification requirements for accountants in this economy, thereby attracting more people into this profession. Assuming all other things are constant, show the effect of this change on the labor market for the accounting industry by shifting one or both of the curves in the following graph. Labor Market in the Accounting Industry Supply Demand Supply Demand EMPLOYMENT IN ACCOUNTING SERVICES INDUSTRY WAGE RATE

1. The link between resource and product markets The following graph represents the labor market in the accounting industry in a hypothetical economy. Suppose the board of accountancy loosens the qualification requirements for accountants in this economy, thereby attracting more people into this profession. Assuming all other things are constant, show the effect of this change on the labor market for the accounting industry by shifting one or both of the curves in the following graph. Labor Market in the Accounting Industry Supply Demand Supply Demand EMPLOYMENT IN ACCOUNTING SERVICES INDUSTRY WAGE RATE

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter1: Welcome To Economics!

Section: Chapter Questions

Problem 10RQ: Give the three reasons that explain why the division of labor increases an economys level of...

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Give the three reasons that explain why the division of labor increases an economys level of production.
1. Optimal Use of a Single Input. Julian Smyth manages production at Taffy Apple Inc., a company that produces a variety of taffy/fruit candies. Over the last several months, he has varied the number of employees on his caramel apple production line from 5 to 12, and found the following relationship. Labor S67∞a 5 8 9 10 11 12 TP 50 90 150 200 240 270 290 300 MP VMP a. In the column labeled MP, calculate the marginal product of labor. b. Suppose the apples sell for $6 per (dozen) box. Calculate the Value Marginal Product (VMP) c. If labor costs $200 per day, how many laborers should the firm hire? Number
7. You are the manager of a firm that uses only labor and capital to produce your product. Assume you hire labor and you rent capital equipment in a very competitive market. You pay your employees at a wage rate of $20 per hour and you rent capital at $25 per hour. Assume the marginal product of labor is 50 units of output per hour and the marginal product of capital is 80 units of output per hour. Based on these given information, clearly explain if you should increase, decrease, or leave unchanged the amount of capital used in your production process.
4. The robot manufacturing industry is very reliant to 2 industries. These industries are the computer manufacturing and the hardware manufacturing, respectively. Upon closer inspection, it was observed that both the computer and hardware manufacturing sectors also relies on the robot manufacturing industry and to each other. It was observed that the robotics industry sells 40% of its output to the computer manufacturing industry and 45% to the hardware industry and the remaining stocks are used by the robotics industry. Meanwhile, the computer industry sells 50% of its output to the robotics industry and 20% to the hardware manufacturers and uses the rest. Furthermore, it was obszerved that the hardware industry uses 20% of its stock and sells the remaining stock evenly to the computer and the robotics manufacturers. Determine the price of output for each economy.
4. Given the equation for the Cobb-Douglas production function Y = AK" L- where 0 0, K 2 0, and L 2 0: (a) Derive the equation for the marginal product of capital. Show your work. (b) Can the marginal product of capital be negative in an economy described by the Cobb-Douglas production function? Briefly explain.
4. Given the following graph, briefly respond to the questions appearing directly below this graph. Сapital A 14 10 3. Isoquant for Output = 60 C %3D 3. Isoquant for E/Output = 40 %3D 2 3 9 11 Labor a. For an output level of 40 units, calculate the marginal rate of technical substitution between points A and B. b. Also for an output level of 40 units, calculate the marginal rate of technical substitution be- tween points D and E.
Imagine a firm that employs two types of workers – some with computer skills and others withno technology related skills. (i) Explain how a firm’s production function is related to its marginal product of labour, howa firm’s marginal product of labour is related to the value of its marginal product and how afirm’s value of marginal product is related to its demand for labour. (ii) Explain how the wage can adjust to balance the supply and demand for labour whilesimultaneously equalling the value of the marginal product of labour.
5. What is the difference between the Marginal Product of Labor (MPL) and the Marginal Revenue Product of Labor (MRPL)? (A) MPL measures the change an additional worker has on profit while MRPL measures thechange and additional worker has on revenue (B) MPL is in monetary units while MRPL is in units of output (C) They are identical (D) MPL is in units of output while MRPL is in monetary units
15. A firm can use three different production technologies, withcapital and labor requirements at each level of output as follows:TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3DailyOutputK L K L K L100 3 7 4 5 5 4150 3 10 4 7 5 5200 4 11 5 8 6 6250 5 13 6 10 7 8a. Suppose the firm is operating in a high-wage country, wherecapital cost is $100 per unit per day and labor cost is $80 perworker per day. For each level of output, which technologyis cheapest?b. Now suppose the firm is operating in a low-wage country,where capital cost is $100 per unit per day but labor cost isonly $40 per unit per day. For each level of output, whichtechnology is cheapest?c. Suppose the firm moves from a high-wage to a low-wagecountry but its level of output remains constant at 200 units
7. Fancy Footwear manufactures shoes. The figure below shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. Output (Quantity of footwear) monoos Icunns a'boral ai rud W d 1 1 2 3 4 5 6 7 8 13g moondaM (abanog) (s B a. Identify the Marginal Product and the Average Product? 23/10W A Labor (units) b. For what quantity of labor does production display diminishing returns? od oldat on BM to dinom od not
Complete the table by computing the marginal product for each worker. Labor Total Output (Number of workers) (Pizzas per day) UNITS OF OUTPUT 9 90 80 70 8909 50 40 330 20 CH 10 HH 0 0 1 0 2 1 2 3 4 5 6 7 8 On the following graph, plot Brian's total output using the green points (triangle symbol). (Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Be sure to plot the first point at (0, 0).) (?) 9 10 000 m2 58 8 3 18 30 43 55 65 73 79 82 80 4 5 6 NUMBER OF WORKERS 7 Marginal Product AAAAAAAAAA B 9 10 A Production Function
2. A manager hires labour and rents capital equipment in a very competitive market. Currently, the wage rate is £6 per hour and capital is rented at £12 per hour. If the marginal product of labour is 50 units of output per hour and the marginal product of capital is 75 units of output per hour, is the firm using the cost-minimising combination of capital and labour? If not, should the firm increase or decrease the amount of capital used in the production process?