The Ajax Coal Company is the only employer in its area. Its only variable input is labor,
Question:
a. How much labor does the firm employ, how much output does it produce, and what is the wage?
b. Suppose now the firm sells a special kind of coal such that it faces a downward-sloping demand curve for its output. In particular, assume that Ajax faces the demand curve given by P = 102 - 1.96Q. How much labor does the firm employ, how much output does it produce, what price does it set for the output, and what is the wage?
c. Assume that Ajax still faces the demand curve P = 102 - 1.96Q, but now further assume that Ajax has five laborers under contract to produce coal at a wage of 15. If Ajax has the option of hiring additional laborers at a higher wage without increasing the wage to the five laborers already under hire, will Ajax increase its labor force? Explain.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: