Wage Rate ($) No 229 22 AP 20 16 13 10 30 45 60 80 100 120135150 90 Marginal Factor Cost Supply Factor Markets Marginal Revenue Product 180 200 160 (a) If the wage rate is $13, state whether there will be a shortage or a surplus of bakers and calculate its size. Show your work Quantity of Bakers (b) Identify the profin-maximizing number of bakers that Bobby's Bakehouse will hire. Explain using the labeling on the graph (c) Identify the profie-maximizing wage rate that Bobby's Bakehouse will pay its bakers, Explain using the labeling on the graph (d) If the marginal product of bakers increases, what will happen to the quantity of output produced by Bobby's AP Micrones Page 11 of 13 Toe Bide Bakehouse? Explain (e) Assume instead that Bobby's Bakehouse uses both labor and capital in its production of baked goods. The marginal product of the last unit of labor hired is 16 baked goods per hour and the marginal product of the last unit of capital rented is 50 baked goods per hour; the hourly wage rate for labor is $8 and the hourly rental price for capital is $5. To minimize the cost of producing its current level of output, should Bobby's Bakehouse rent more capital, less capital, or the same amount of capital? Explain using marginal analysis.
Wage Rate ($) No 229 22 AP 20 16 13 10 30 45 60 80 100 120135150 90 Marginal Factor Cost Supply Factor Markets Marginal Revenue Product 180 200 160 (a) If the wage rate is $13, state whether there will be a shortage or a surplus of bakers and calculate its size. Show your work Quantity of Bakers (b) Identify the profin-maximizing number of bakers that Bobby's Bakehouse will hire. Explain using the labeling on the graph (c) Identify the profie-maximizing wage rate that Bobby's Bakehouse will pay its bakers, Explain using the labeling on the graph (d) If the marginal product of bakers increases, what will happen to the quantity of output produced by Bobby's AP Micrones Page 11 of 13 Toe Bide Bakehouse? Explain (e) Assume instead that Bobby's Bakehouse uses both labor and capital in its production of baked goods. The marginal product of the last unit of labor hired is 16 baked goods per hour and the marginal product of the last unit of capital rented is 50 baked goods per hour; the hourly wage rate for labor is $8 and the hourly rental price for capital is $5. To minimize the cost of producing its current level of output, should Bobby's Bakehouse rent more capital, less capital, or the same amount of capital? Explain using marginal analysis.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter2: Choice In A World Of Scarcity
Section: Chapter Questions
Problem 2SCQ: Return to the example in Figure 2.4. Suppose there is an improvement in medical technology that...
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