Assignment: Elasticity and Labor Market Equilibrium

Student Name:

In this Assignment, you will elaborate price elasticity of demand and supply in the short run and long run. You will evaluate factors that change equilibrium wage rate and employment level. Moreover, you will calculate total revenue product and marginal revenue product, and compare them with total cost and marginal cost in order to figure out optimal quantity of labor that should be hired to maximize profit.

Instructions: Answer all of the following questions. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.

1. 1. Is the price elasticity of demand for gasoline more elastic over a shorter or a longer period of time? Explain.
2. Is the price elasticity of supply, in general, more elastic over a shorter or a longer period of time? Explain.
3. 3. Why is the supply curve for labor usually upward sloping? Explain.

4. In the graph below, assume that the market demand curve for labor is initially D1. The market supply curve for labor is indicated with figure “S”. Wage rate is depicted on the other things held constant vertical axis (dollars per unit) ad employment level (quantity of labor) is depicted along the horizontal axis. Answer the following questions.

 

1. What are the initial equilibrium wage rate and employment level?
2. Other things held constant, assume that the price of a substitute resource decreases.

What will happen to demand for labor? Will it increase or decrease?

 

What are the new equilibrium wage rate and employment level?

 

1. Other things held constant, suppose that demand for the final product increases. Using labor demand curve D₁ as your starting point, what happens to the demand for labor?

 

What are the new equilibrium wage rate and employment level?

 

1. Assume this industry is dominated by non-union workers. How would the equilibrium wage compare to that earned in a similar industry with similarly skilled union workers?

 

5. 5. Use the following data to answer the questions below. Assume a perfectly competitive product market.

Units of LaborUnits of Output

0                                   0

1                                   8

2                                12

3                                17

4                                21

5                                23

1. Calculate the total revenue product and marginal revenue product at each level of labor input if output sells for $4 per unit.

 

1. If the wage rate is $15 per hour, how many units of labor will be hired?

Elasticity and Labor Market Equilibrium-MT455 paper

Related paper

Costs and Cost Minimizing Output-MT455

Question

 Costs and Cost Minimizing Output

In this Assignment, you will analyze fixed and variable costs of a small business. You will also evaluate optimal quantity of output that minimizes costs and maximizes profits.

In this Assignment, you will be assessed on the following outcome:

GEL-1.1: Demonstrate college–level communication through the composition of original materials in Standard American English.

Assignment:

Before answering the following questions, review the Assignment Checklist. Then, in a separate Word document, write a 1–2 page expository research paper answer the following questions based on the rule for minimizing costs of production in regard to a small business plan to minimize costs in order to increase productivity and maximize profits:

1. 1. Pat’s Pizza Restaurant owner incurs various economic costs of production. Explain whether each of the following is an explicit cost or an implicit cost. Which of the two costs should Pat minimize to maximize his account profit?
2. Payments for rented manufacturing equipment.
3. A firm’s use of a warehouse that it owns and could rent to another firm.
4. Wages paid to the firm’s workers.
5. The wages the firm’s owner could earn if he/she worked for another company.
6. Consider the following information in the table for Pat’s Pizza Restaurant and answer the questions below by using the cost minimization rule that takes into account the marginal product per dollar of inputs of production.

Marginal Product of Capital	4,000
Marginal Produce of Labor	100
Wage Rate	$10
Rental Price of Pizza Ovens	$500

 

1. Is the owner of Pat’s Pizza Restaurant minimizing costs? Explain using the data in the table.
2. Should he rent more ovens and hire fewer workers or rent fewer ovens and hire more workers to increase productivity and lower costs of production?

 

3. Consider Pat’s Pizza Restaurant’s production decision in both the short-run and long–run. Pat wants to improve the productivity of the firm in the long run. Explain the types of input costs that might be fixed in the short–run and types of costs that may be variable in the long–run.  Provide examples for fixed inputs and variable inputs as well as fixed costs and variable costs for the Restaurant in the short run. What long run economic decisions should Pat make to increase productivity, minimize costs, and maximize profit?

Costs and Cost Minimizing Output-MT455  paper

Related paper

Market Equilibrium and Taxes