Gopher Excavators produces shovels in a small factory and sells the shovels in a

Question

Gopher Excavators produces shovels in a small factory and sells the shovels in a competitive price-taker market. The following table shows the company's production function: Use the blue points (circle symbol) to plot the production function for Gopher Excavators on the following graph. Calculate the marginal product of labor (MP of labor) of each worker, and then plot the MP of labor curve on the following graph using the blue points (circle symbol). The following graph shows the demand for labor for three different prices per shovel: Given the company's marginal product of labor curve shown on the initial graph, line on the this graph shows Gopher's demand for labor when the price of a shovel is $0.50, and line shows Gopher's demand for labor when the price of a shovel is $1.50.

Explanation / Answer

1 ( 0.5 for MPl )

Hiring the first worker increases output by 90 shovels, so the MPL is 90 shovels. Thus, the first point on the MPL curve is (0.5, 90). Increasing the number of workers from 1 to 2 raises production from 95 to 175, so the marginal product is equal to . Thus, (1.5, 85) is another point on the MPL curve.

BLanks 1) Line O 2) Line N

Labor Output MP l 0 0 0

1 ( 0.5 for MPl )

90 90 2 (1.5 for Mpl) 175 85 3 (2.5 for MPl) 245 70 4 (3.5 for MPl) 300 55 5 (4.5 for MPl) 325 25

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