Module 9: The following paragraph concems questions 1 to 4. It is about the industry labour...
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Module 9: The following paragraph concems questions 1 to 4. It is about the industry labour demand vis-a-ris marginal revenue product of labour for individual firms. Assume that the production process uses only L (labour) and K (capital). Also assume that both the output market and the input markets are perfectly competitive. How does one obtain the industry labour demand? Industry labour demand requires more than a horizontal sum of the individual MRPLS (marginal revenue product of labour). Consider that there is a fall in the wage rate. This will cause all the firms in the industry to hire more labour. As production increases in the whole output market, output price will fall. Since of labour), when price falls MRPL falls as well. Hence, the falling wage causes two impacts on the quantity of labour demanded by a representative firm in the input market. Firstly, similar to the law of đemană, _(1) (where Pis output price and MPL is the marginal product (2) increases along the MRPL fumction Secondly, the MRPL function shifts (3). As a result, the change in the quantity of labour demanded is smaller than the change in the quantity of labour demanded by only the MRPL relationship. Therefore, the industry demand for labour is (4) elastic than the horizontal sums of the MRPL function. 1. a) MRPL=P x MPL b) MRPL=P+ MPL c) MRPL=P/ MPL) 2. a) quantity of capital demanded c) labour demand b) quantity of labour demanded. d) labour supply 3. a) left b) right 4. a) more b) less Module 9: The following paragraph concems questions 1 to 4. It is about the industry labour demand vis-a-ris marginal revenue product of labour for individual firms. Assume that the production process uses only L (labour) and K (capital). Also assume that both the output market and the input markets are perfectly competitive. How does one obtain the industry labour demand? Industry labour demand requires more than a horizontal sum of the individual MRPLS (marginal revenue product of labour). Consider that there is a fall in the wage rate. This will cause all the firms in the industry to hire more labour. As production increases in the whole output market, output price will fall. Since of labour), when price falls MRPL falls as well. Hence, the falling wage causes two impacts on the quantity of labour demanded by a representative firm in the input market. Firstly, similar to the law of đemană, _(1) (where Pis output price and MPL is the marginal product (2) increases along the MRPL fumction Secondly, the MRPL function shifts (3). As a result, the change in the quantity of labour demanded is smaller than the change in the quantity of labour demanded by only the MRPL relationship. Therefore, the industry demand for labour is (4) elastic than the horizontal sums of the MRPL function. 1. a) MRPL=P x MPL b) MRPL=P+ MPL c) MRPL=P/ MPL) 2. a) quantity of capital demanded c) labour demand b) quantity of labour demanded. d) labour supply 3. a) left b) right 4. a) more b) less
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Answer 1 a MRPL PMPL 2 b Quantity of Labour demanded 3 a Left 4 b Less Assume that the production pr... View the full answer
Related Book For
Intermediate Microeconomics and Its Application
ISBN: 978-1133189039
12th edition
Authors: Walter Nicholson, Christopher M. Snyder
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