microeconomics The Case Assignment focuses on several concepts from the labor ma
ID: 1092622 • Letter: M
Question
microeconomics
The Case Assignment focuses on several concepts from the labor market including marginal production, total production, and wage determination. These terms are important in determining how many workers will be hired by a firm.
-Each worker costs the firm $4,000 per month.
-Price of the output (car) is $20,000
Should the firm move from the 15th to the 20th worker? In other words, should the firm hire 20 workers. Why? (Hint: You need to calculate the cost of total workers and the marginal revenue product [MRP = price of output * marginal product of labor].)
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Explanation / Answer
Abstract
Supply and demand is one of the most fundamental concepts of economics and it is the backbone
of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.
The case assignment focuses on several concepts from the labor market including marginal production, total production, and wage determination. These terms are important in determining how many workers will be hired by a firm.
1. Discuss two factors that would increase demand for labor. (Hint: Recall that the demand for factors of production or resources is called a derived demand)
Factors that can increase or decrease labor demand include changes in the output price, technological change and the supply of other production inputs. A company
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