Consider a competitive firm that produces bots. Labor (L) and capital (K) are the only two...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider a competitive firm that produces bots. Labor (L) and capital (K) are the only two inputs of production; each unit of labor is paid the market wage (w), and each unit of capital is rented at the rental price of capital (r). Output (Y) is therefore a function of labor and capital, or Y = f (K, L), and is sold at the market price (P). The goal of this firm is to maximize profit given the price of bots, the wage rate, the rental rate of capital, and production technology by choosing its labor and capital inputs. Fill in the following equations with the firm's profit maximization problem: Profit = Revenue - Labor Cost - Capital Cost Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MPL). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is. Firms will continue to hire workers until the change in profit is describes the profit-maximizing labor choice of the firm? Ow=MPL ○ MPL = MPL = £ MPL = w XP Given this condition, which of the following equations correctly Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following: MPL 20-L F On the graph, use the blue line (circle symbol) to show the firm's demand for labor. Then, place the black point (plus symbol) on the graph to indicate the real wage and the profit-maximizing quantity of labor. Note: Dashed drop lines will automatically extend to both axes. UNITS OF OUTPUT (Bots) PER UNIT OF LABOR 8 18 16 0 2 4 6 8 10 12 UNITS OF LABOR 14 16 18 20 (?) Labor E Real w, labor Consider a competitive firm that produces bots. Labor (L) and capital (K) are the only two inputs of production; each unit of labor is paid the market wage (w), and each unit of capital is rented at the rental price of capital (r). Output (Y) is therefore a function of labor and capital, or Y = f (K, L), and is sold at the market price (P). The goal of this firm is to maximize profit given the price of bots, the wage rate, the rental rate of capital, and production technology by choosing its labor and capital inputs. Fill in the following equations with the firm's profit maximization problem: Profit = Revenue - Labor Cost - Capital Cost Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MPL). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is. Firms will continue to hire workers until the change in profit is describes the profit-maximizing labor choice of the firm? Ow=MPL ○ MPL = MPL = £ MPL = w XP Given this condition, which of the following equations correctly Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following: MPL 20-L F On the graph, use the blue line (circle symbol) to show the firm's demand for labor. Then, place the black point (plus symbol) on the graph to indicate the real wage and the profit-maximizing quantity of labor. Note: Dashed drop lines will automatically extend to both axes. UNITS OF OUTPUT (Bots) PER UNIT OF LABOR 8 18 16 0 2 4 6 8 10 12 UNITS OF LABOR 14 16 18 20 (?) Labor E Real w, labor
Expert Answer:
Answer rating: 100% (QA)
Question Profit Revenue Labor cost Capital Cost PYWLrk change in revenue d... View the full answer
Related Book For
Operations and Supply Chain Management
ISBN: 978-0078024023
14th edition
Authors: F. Robert Jacobs, Richard Chase
Posted Date:
Students also viewed these economics questions
-
You are the head of research for a biological research organization. Six months ago, you purchased a $2,000 commercial refrigerator for storing research samples. Recently, you suffered a loss of more...
-
The head of a grass string trimmer has 100 g of cord wound in a light cylindrical spool with inside diameter 3.00 cm and outside diameter 18.0 cm, as in Figure P10.50. The cord has a linear density...
-
A control system for positioning the head of a floppy disk drive has the closed-loop transfer function Plot the poles and zeros of this system and discuss the dominance of the complex poles. What...
-
Show that for a linear ODE y' + p(x)y = r(x) with continuous p and r in |x - x 0 | < a Lipschitz condition holds. This is remarkable because it means that for a linear ODE the continuity of f(x, y)...
-
A friend says that, since Earth's gravity is so much stronger than the Moon's gravity, rocks on the Moon could be dropped to Earth. What is wrong with this assumption?
-
Which of the following statements is true? a. Not all inheritance patterns follow a strict dominant/ recessive relationship. b. Geneticists want to understand both inheritance patterns and the...
-
Using an incremental internal rate of return (IRR) analysis, the decision to replace the "current best" by the "challenger"' is based on what decision rule? a. The internal rate of return of the...
-
The marketing department of Metroline Manufacturing estimates that its sales in 2013 will be $1.5 million. Interest expense is expected to remain unchanged at $35,000, and the firm plans to pay...
-
Mr. Smith, a high school teacher in Gander, decided to quit his current job and opened a private tutorial firm. He gave up his $38,940 a year job as a teacher. He used $27,500 of his savings that...
-
Suppose the company continues to manufacture its product in the United States, but now it sells its product in the United States, the united Kingdom, and possibly other countries. The company can...
-
The free cash flow to equity model (FCFE) is used to obtain the analyst's estimate of the market value of equity. Group of answer choices True False
-
If a consumer reallocates their spending to purchase more of a good whose marginal utility is higher than its price, what is likely to happen?
-
How the Federal Reserve Implements Monetary Policy? describes how the Fed can use its tools to achieve its dual mandate?
-
Compute the "Per capita GDP", which can be obtained by dividing the GDP for each state by that state's population. This number helps economists compare the economic activity between regions?
-
What legal policy in Texas requires higher resource school districts to send more to poorer districts to increase equity in public school funding?
-
What are the recent financial stimulus of the government given to the business world and the public during the pandemic ? (by printing dollars) might have diluted the value of the dollar.
-
Modify the Student class to compute the graduation year. Assume all students (in a perfect world) graduate in 4 years. Define a method named getGraduationYear() which returns the graduation year...
-
The overall reaction and equilibrium constant value for a hydrogenoxygen fuel cell at 298 K is 2H 2 (g) + O 2 (g) 2H 2 O(l) K = 1.28 10 83 a. Calculate E cell and G 8 at 298 K for the fuel cell...
-
The following are sales revenues for a large utility company for 2002 through 2012. Forecast revenue for 2013 through 2016. Use your own judgment, intuition, or common sense concerning which model or...
-
What is it about service processes that makes their design and operation so different from manufacturing processes?
-
What is the term that means making the person who does the work responsible for ensuring that specifications are met?
-
______________ refers to the location, time, and occasion where communication occurs.
-
Identify the four steps of the KEYS process.
-
______________ is the general term for the discussion, determination, and deliberation processes that attempt to decide what is right or wrong, what others should or should not do, and what is...
Study smarter with the SolutionInn App