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Chapter 28: Q. b - For Critical Thinking (page 633)

Why might an employer choose not to hire some job candidates offering relatively high levels of marginal product if the price of the product the employer sells decreases considerably?

Short Answer

Expert verified

Pricing is the means by which a firm determines the price at which its products and services will be sold. The marginal product of a company is the extra output produced as a result of additional input placed into the company.

Step by step solution

01

Introduction.

Pricing is the process by which a company determines the price at which it will sell its products and services, and it may be part of the company's marketing strategy.

02

Marginal product.

A company's marginal product is the additional output produced as a result of additional input placed into the company. It is also known as marginal physical product.

In practice, this could refer to the additional doughnuts produced by a donut shop after they hire an additional employee.

03

Step3:

The following factors influence labour demand:

  • Productivity of labour
  • Technological advancements
  • changes in the number of businesses
  • Changes in the demand for a company's product.
  • Profitability of the company

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Most popular questions from this chapter

The following table depicts the output of a firm that manufactures computer printers. The printers sell for $100each.

Calculate the marginal product and marginal revenue product at each input level above 10 units.

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 that workers can utilize and that does not substitute for the functions provided by workers' labor.

The current market wage rate is \(10, the rental rate of land is \)1,000per 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 product of labor is 100, the marginal product of land is 10,000, and the marginal product of capital is 4,000. Is the firm minimizing costs? Why or why not?

If more firms were to find ways to induce larger numbers of workers to hold true to labor supply commitments, would the market labor supply curve tend to shift to the left or to the right? Explain your reasoning.

Suppose that we were to observe unemployment in the labor market depicted in Figure 28-4. Would this imply that the current wage rate is above or below the $1,000 equilibrium weekly wage rate in the figure? Explain briefly.
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