Given the data in the table A below, complete the labor demand schedule in table
ID: 1193057 • Letter: G
Question
Given the data in the table A below, complete the labor demand schedule in table B. Please show al your work, nearly, in deriving the labor demand schedule. Contrast this schedule to the value of marginal product (VMP) schedule that would exist given this data. Explain why the labor demand and the VMP schedules differ. Graph the data to help show your answers.
Table A
Total
$1
Table B: Labor Demand Schedule
2. Expalin how each of the following would affect the demand for labor schedule you derived above:
(a) An increase in the price of a gross substitute for labor.
(b) A decrease in the price of a pure complement that labor helps to produce.
(c) A decrease in the demand for the product that the labor helps to produce.
LaborTotal
product Inputs product price 0 0 $1.10 1 17$1
2 32 $0.90 3 45 $0.80 4 55 $0.70 5 62 $0.65 6 68 $0.60Explanation / Answer
2. a) Increase in the price of substitute of labour will increase the demand for labour.
b) Increase in the price of complement will decrease the demand for labour because the complement is always used together with every unit of labour so essentially as the price of the package rises, the demand for labour falls.
c) Decrease in the price of product reduces the marginal worth of the labour and hence its demand.
Labor
TR
Total
Product
MR
Inputs
product
price
0
0
0
$1.10
1
17
17
$1
17
2
64
32
$0.90
47
3
135
45
$0.80
71
4
220
55
$0.70
85
5
310
62
$0.65
90
6
408
68
$0.60
98
Table B: Labor Demand Schedule
wage
Quantity
rate
Demanded
$18
6 (MR>MC)
14
6(MR>MC)
11
6(MR>MC)
6
6(MR>MC)
2
6(MR>MC)
1
6(MR>MC)
Labor
TR
Total
Product
MR
Inputs
product
price
0
0
0
$1.10
1
17
17
$1
17
2
64
32
$0.90
47
3
135
45
$0.80
71
4
220
55
$0.70
85
5
310
62
$0.65
90
6
408
68
$0.60
98
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.