Assume that a firm produces output using one fixed input, capital, and one variable input, labor. The firm can sell all of the output it produces at a market price of $3.00 each, can hire all of the workers it wants at a market wage rate of $11.00 each, and has fixed costs of $10.00. It faces the following production schedule Number of employees . . . Total output . . . . . . . . 0 . . . . . . . . . . . . . . 0 . . . . . . . . 1 . . . . . . . . . . . . . . 14 . . . . . . . . 2 . . . . . . . . . . . . . . 26 . . . . . . . . 3 . . . . . . . . . . . . . . 35 . . . . . . . . 4 . . . . . . . . . . . . . . 42 . . . . . . . . 5 . . . . . . . . . . . . . . 46 . . . . . . . . 6 . . . . . . . . . . . . . . 48 (A) In what kind of market structure does this firm sell its output? How can you tell? (B) In what kind of market structure does this firm hire its employees? How can you tell? (C) Using marginal revenue product analysis, how many employees should this firm hire to maximize short-run profits? How can you determine that? (D) Based on your answer in part (C), how many units of output will this firm produce? (E) At the level of output you determined in part (D), is the firm earning an economic profit, earning a normal profit, or suffering a loss? How can you tell?
This site needs a Buisness and economy forum..what do you think about that??? As for the question well let's see;...you might need to post some more info for the problem..i understand what the problem is getting at but i don't know how to solve it....sorryPlease Register or Log in to view the hidden image!
We've learned about four different markets structures in high school microeconomics. Monopoly Monopolistic competition Oligopoly Pure competition This type of question should be familiar to anyone who's taken the specific course.
i've just finished 10th. you've basically just illustrated the law of diminishing marginal returns. i'm out of touch with economics for a while now about 1 and half months. what are the diff. amrket structures which you talk about? are you talking about capitalistic, socialistic or what? give a bit more info.
Oh, it's all capitalistic, with the United States being the basis for this microeconomics course. The four market structures are listed above your post, airavata.
sargentlard... a business and economy forum...thats a great idea...I don't know if it would fit in on this site that well...but perhaps it might...you should suggest it...its good to think about business and the economy so we know how to handle our money.
I'm guessing Pure Competition is just another name for Perfect Competition. I'm not sure on A. but B is perfect (pure) competition for the labor market, because no single laborer can set a price above $11. The market wide price is $11. Firms (i'm guessing laborers too) in perfect competition are price takers, whereas monopolies are price makers. Since $11 is the given price market wide, the laborers are price takers and in perfect competiton. parts c,d,e you need to make a table that looks like this Employees | Employee Cost | Marginal Employee Cost| Output | Revenue | Total Revenue | Marginal Revenue Total Revenue will start at -10 and increase by 3x(output quantity). You need to find where marginal employee cost equals marginal revenue, this is your optimum level of production. The rest is easy once you find that.
Hey ORBIE, thanks very much for the reply! I made a perfect score on the essay today. Please Register or Log in to view the hidden image! When I said pure competition, I meant perfect competition, so you were correct there. Also, I only needed a "total revenue" column without a separate one for "revenue," and then I added a "profit" column at the end. Thanks again, dude!
Re: sargentlard... Well that's for Porfiry to decide but isn't buisness in itself a science??...i wouldn't mind discussing...hearing others peoples take on the market and getting advice on a well balanced portfolio...maybe i should mention that to wet1 but he'll probably read this himself at one point or another????... Thanks fredxPlease Register or Log in to view the hidden image!
Glad to help ya Please Register or Log in to view the hidden image! Perfect score! That's impressive.
