Chapter 14, The Demand for Resources Video Solutions, Economics: Principles, Problems, and Policies

Problem 1

Cindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12 th. Cindy estimates that a 12 th worker would cost her $\$ 100$ per day in wages and benefits while increasing her total revenue from $\$ 2,600$ per day to $\$ 2,750$ per day. Should Cindy hire a 12 th worker?
a. Yes.
b. No.
c. You need more information to figure this out.

Aanand Shah

Numerade Educator

01:24

Problem 2

Complete the following labor demand table for a firm that is hiring labor competitively and selling its product in a competitive market.
a. How many workers will the firm hire if the market wage rate is $\$ 27.95 ?$ S19.95? Explain why the firm will not hire a larger or smaller number of units of labor at each of these wage rates.
b. Show in schedule form and graphically the labor demand curve of this firm.
c. Now again determine the firm's demand curve for labor, assuming that it is selling in an imperfectly competitive market and that, although it can sell 17 units at $\$ 2.20$ per unit, it must lower product price by 5 cents in order to sell the marginal product of each successive labor unit. Compare this demand curve with that derived in part $b$. Which curve is more elastic? Explain.

Armaan Tourani

Numerade Educator

01:37

Problem 3

Alice runs a shocmaking factory that utilizes both labor and capital to make shoes. Which of the following would shift the factory's demand for capital? You can sclect one or more answers from the choices shown.
a. Many consumers decide to walk barefoot all the time.
b. New shoemaking machines are twice as efficient as older machines.
c. The wages that the factory has to pay its workers rise due to an economy-wide labor shortage.

Natalie Britton

Numerade Educator

05:17

Problem 4

FreshLeaf is a commercial salad maker that produces "salad in a bag" that is sold at many local supermarkets. Its customers like lettuce but don't care so much what type of lettuce is included in each bag of salad, so you would expect FreshLeaf's demand for iceberg lettuce
to be:
a. Elastic.
b. Inelastic.
c. Unit elastic.
d. All of the above.

Pronoy Sinha

Numerade Educator

03:15

Problem 5

Suppose the productivity of capital and labor are as shown in the table bclow. The output of these resources scils in
a purely competitive market for $\$ 1$ per unit. Both capital and labor are hired under purely competitive conditions at
\$3 and SI, respectively.
a. What is the least-cost combination of labor and capital the firm should employ in producing 80 units of output? Fxplain.
b. What is the profit-maximizing combination of labor and capital the firm should use? Explain. What is the resulting level of output? What is the cconomic profit?
Is this the least costly way of producing the profitmaximizing output?

Oluwadamilola Ameobi

Numerade Educator

03:31

Problem 6

A software company in Silicon Valley uses programmers (labor) and computers (capital) to produce apps for mobile devices. The firm estimates that when it comes to labor, $\mathrm{MP}_{t}=5$ apps per month while $P_{L}=\$ 1,000$ per month. And when it comes to capital, $\mathrm{MP}_{\mathrm{C}}=8$ apps per month
while $P_{C}=S 1,000$ per month. If the company wants to maximize its profits, it should:
a. Increase labor while decreasing capital.
b. Decrease labor while increasing capital.
c. Keep the current amounts of capital and labor just as they are.
d. None of the above.

Lucas Finney

Numerade Educator