ECON 2302
HOMEWORK PROBLEMS
FOR PART 6
The purpose of doing these problems is to increase your understanding
of the material.
It will help you on quizzes and exams. You do not have to turn in this
work. I will not go
over these problems specifically in class. Read the assigned chapters and
come to class.
Check on the completed work which is on reserve in the SCC library.
After doing that,
if you still have difficulties, come to see me during my office hours.
----
Dr. Cohick
1. Fill in the blanks in this table:
|
Number of workers hired |
Quantity of output (Q) |
Marginal Revenue (MR) |
Marginal Physical Product (MPP) |
Marginal Revenue Product (MRP) |
|
1 |
10 |
5 |
10 |
|
|
2 |
18 |
4 |
8 |
|
|
3 |
24 |
3 |
6 |
|
|
4 |
28 |
2 |
4 |
|
2. Plot the following data on a graph in the space to the right, then answer the following questions.
|
Number of workers |
Wage ($/hr) |
MRP |
|
1 |
10 |
22 |
|
2 |
10 |
18 |
|
3 |
10 |
14 |
|
4 |
10 |
10 |
|
5 |
10 |
6 |
|
6 |
10 |
2 |
a. Why does MRP decrease as the number of workers increases? ___________________
_______________________________________________________________________
b. A profit-maximizing firm would hire how many workers? ______________________
c. If wages rose to $14/hr and nothing else changed, what would the firm do? _________
_______________________________________________________________________
3. Fill out the following table:
|
Wage rate |
Quantity of labor demanded |
Is Labor Supply elastic or inelastic? |
Is this segment of the labor market high-skill or low-skill? |
|
Increases 10% |
Decreases 30% |
|
|
|
Increases 50% |
Decreases 10% |
|
|
|
Decreases 20% |
Increases 5% |
|
|
|
Decreases 50% |
Increases 100% |
|
|
4. Fill in the blank spaces in this table:
|
MPP of labor |
Price of labor |
MPP of capital |
Price of capital |
Should the firm add more labor or more capital? |
|
30 |
$20 |
40 |
$12.50 |
|
|
50 |
$40 |
100 |
$50 |
|
|
100 |
$30 |
100 |
$40 |
|
5. Fill in the blank spaces in the table below and then draw the Lorenz Curve it shows.
|
Quintile |
Income share (%) |
Cumulative % of income |
Cumulative % of households |
|
Bottom 1/5 |
10 |
|
|
|
Second 1/5 |
12 |
|
|
|
Middle 1/5 |
22 |
|
|
|
Fourth 1/5 |
25 |
|
|
|
Highest 1/5 |
31 |
|
|
6. Fill in the blanks in this table:
|
Offered wage ($/hr) |
Will Joe accept the job? |
Economic rent |
|
25 |
Yes |
|
|
20 |
Yes |
|
|
15 |
No |
|
|
10 |
No |
|
a. What is Joe’s reservation wage? ___________________________________________
b. Define economic rent. ___________________________________________________
________________________________________________________________________
7. A mother (one child) is receiving $200 a week income maintenance welfare payment. She has a job opportunity paying $ 6.50/hr for a 5-day, 40-hour week. If she takes the job, she will have to pay $20/day child care. If she goes to work, she loses half of her welfare payment. Should she accept the job? __________ Why or why not? _________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________