Problem 1) Gordon’s Pizzeria, a firm that is small relative to both the labor market and the pizza market, can hire workers at an hourly wage of $12. The 50th hour of labor added 4 pizzas to the firm’s output, and each pizza can be sold for $10.
a) How much does the 50th labor-hour add to the firm’s profit? ______
b) Should the firm have hired this 50th unit of labor? Explain why or why not.______
Problem 2: Refer to the figure below.
(a) If there is only one employer in this labor market, then how much labor will be hired? _______
(b) What is the wage this employer will pay? ______
Problem 3: Pam is thinking of buying a new printer. If she does, the printer will add $300 to her office’s revenue right away as well as one, two, and three years from now.
(a) Assuming an annual interest rate of 6%, what is the present value of this printer?
(b) The printer costs $1,150. Would Pam buy this printer?