In equilibrium, with diminishing marginal products, the slope of the PPF is equal to: of the marginal products of labor?
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Step 1: In equilibrium with diminishing marginal products, the slope of the PPF is equal to the ratio of prices for the products. Show more…
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5. In equilibrium, with diminishing marginal products, the slope of the PPF is equal to: a. the ratio of prices for the products. b. the slope of the highest possible indifference curve. c. the ratio of the marginal products of labor. d. the ratio of prices for the products, the slope of the highest possible indifference curve, and the ratio of the marginal products of labor.
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Under perfect competition, the wage rate equals the value of the marginal product.
Marginal Product of Labor The output y of a manufacturing process is a function of the size of the labor force n using the function $y=k \sqrt{n}$ The marginal product of labor, defined as $d y / d n,$ measures the rate that output increases with the size of the labor force, and is a measure of labor productivity.(a) Show that $\frac{d y}{d n}=\frac{k}{2 \sqrt{n}}$ (b) How can you tell from your answer to part (a) that as the size of the labor force increases, the marginal product of labor gets smaller? This is a phenomenon known as the law of diminishing returns, discussed more in the next chapter.
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