1. The following table depicts the output of a firm that manufactures computer printers. The printers sell for $100 each. Calculate the marginal physical product and marginal revenue product at each input level above 10 units.
2. Refer back to your answers to Problem 1 in answering the following questions.
a. What is the maximum wage the firm will be willing to pay if it hires 15 workers?
b. The weekly wage paid by computer printer manufacturers in a perfectly competitive market is $1,200. How many workers will the profit-maximizing employer hire?
c. Suppose that there is an increase in the demand for printed digital photos. Explain the likely effects on marginal revenue product, marginal factor cost, and the number of workers hired by the firm.
3. Explain how the following events would affect the demand for labor.
a. A new education program administered by the company increases labor's marginal product.
b. The firm completes a new plant with a larger workspace and new machinery.
4. A firm hires labor in a perfectly competitive labor market. Its current profit-maximizing hourly output is 100 units, which the firm sells at a price of $5 per unit. The marginal physical product of the last unit of labor employed is 5 units per hour. The firm pays each worker an hourly wage of $15.
a. What marginal revenue does the firm earn from sale of the output produced by the last worker employed?
b. Does this firm sell its output in a perfectly competitive market?
4. A profit-maximizing monopolist hires workers in a perfectly competitive labor market. Employing the last worker increased the firm's total weekly output from 110 units to 111 units and caused the firm's weekly revenues to rise from $25,000 to $25,750. What is the current prevailing weekly wage rate in the labor market?
5. The current market wage rate is $10, the rental rate of land is $1,000 per unit, and the rental rate of capital is $500. Production managers at a firm find that under their current allocation of factors of production, the marginal physical product of labor is 100, the marginal physical product of land is 10,000, and the marginal physical product of capital is 4,000. Is the firm minimizing costs? Why or why not?
6. Consider the diagram below, which displays the marginal cost and marginal benefit of water pollution abatement in a particular city, and answer the following questions.
a. What is the optimal percentage degree of water cleanliness?
b. When the optimal percentage degree of water cleanliness has been attained, what cost will be incurred for the last unit of water cleanup?
7. The following table gives hypothetical annual total costs and total benefits of maintaining alternative populations of Asian elephants.
a. Calculate the marginal costs and benefits, and draw marginal benefit and cost schedules.
b. Given the data, what is the socially optimal world population of Asian elephants?
c. Suppose that two events occur simultaneously. Technological development allows machines to do more efficiently much of the work that elephants once did, which reduces by $10 million the marginal benefit of maintaining the elephant population for each 7,500 increment in the elephant population. In addition, new techniques for breeding, feeding, and protecting elephants reduce the marginal cost by $40 million for each 7,500 increment in the elephant population. What is the new socially optimal population of Asian elephants?