ECO 202-05 Principles of Macroeconomics (FA17) Test:ECO 202 Final Exam Time Rema
ID: 1119792 • Letter: E
Question
ECO 202-05 Principles of Macroeconomics (FA17) Test:ECO 202 Final Exam Time Remaining: 01:40.30 Submit Test This Question: 1 pt 42 of 95 (37 complete) This Test: 95 pts Suppose Die Cast The of an hour Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.50 table shows the number of brackets that can be produced from a gliven number of labor hours Assume that the company cannot hire labor for a fraction The marginal product of labor for the first hour of labor isEnter your response as an integer) The value of the marginal product of labor for th, first hour of labor is (Round you response to two dec mal places) f the wage paid to workers in Die Cast's plant is $25/hour,it should employworkeris) Enter your response as an integer) If the wage paid to workers in Die Casts plant is S35 hour i should employ worker s Enter your esp nse as an teger ) If the wage is $25/hour, but the price of a bracket declines to $1 .00,it should employworkeris) (Enter your response as an integer)Explanation / Answer
Calculations:
Hours of Labor
Output
Marginal Product of labor
Value of Marginal product of labor when price is $1.50
Value of Marginal product of labor when price is $1.00
0
0
-
-
-
1
50
50-0=50
50 * $1.50 = $75
50 * $1.00 = $50
2
90
90 – 50 = 40
40 * $1.50 = $60
40 * $1.00 = $40
3
120
120 – 90 = 30
30 * $1.50 = $45
30 * $1.00 = $30
4
140
140 – 120 = 20
20 * $1.50 = $30
20 * $1.00 = $20
5
150
150 – 140 = 10
10 * $1.50 = $15
10 * $1.00 = $10
6
155
55 – 150 = 5
5* $1.50 = $7.5
5* $1.00 = $5.00
7
157
157 – 155 = 2
2 * $1.50 = $3
2 * $1.00 = $2
Answers:
1) Marginal product of labor for the first hour of labor is = 50 - 0 = 50
Note: The marginal product of labor is the additional output because of adding one more unit of labor.
2) The value of the marginal product of labor for the first hour of labor is = marginal product of labor * price = 50 * 1.50 = $75
3) If the wage is $25/hour, it should employ 4 hours of labor.
Explanation: A firm should employ labor as long as the value of the marginal product of labor is equal to or higher than the wage rate.
4) If the wage is $35/hour, it should employ 3 hours of labor.
5) If the wage is $25/hour but the price is $1, it should employ 3 units of labor hours.
Hours of Labor
Output
Marginal Product of labor
Value of Marginal product of labor when price is $1.50
Value of Marginal product of labor when price is $1.00
0
0
-
-
-
1
50
50-0=50
50 * $1.50 = $75
50 * $1.00 = $50
2
90
90 – 50 = 40
40 * $1.50 = $60
40 * $1.00 = $40
3
120
120 – 90 = 30
30 * $1.50 = $45
30 * $1.00 = $30
4
140
140 – 120 = 20
20 * $1.50 = $30
20 * $1.00 = $20
5
150
150 – 140 = 10
10 * $1.50 = $15
10 * $1.00 = $10
6
155
55 – 150 = 5
5* $1.50 = $7.5
5* $1.00 = $5.00
7
157
157 – 155 = 2
2 * $1.50 = $3
2 * $1.00 = $2
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