demand table: led zep

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Demand Table: Led Zep. I think per average income per capita in the U.S. is in the range. 1)Less than $20,0009) $55,000-$60,000 2) $20,000-25,00010) more than $60,000 3) $25,000-30,000 4) $30,000-35,000 5) $35,000-40,000 6)$ 40,000-45,000 7) $45,000-50,000 - PowerPoint PPT Presentation

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  • Demand Table: Led Zep

  • I think per average income per capita in the U.S. is in the range1)Less than $20,0009) $55,000-$60,0002) $20,000-25,00010) more than $60,0003) $25,000-30,000 4) $30,000-35,000 5) $35,000-40,000 6)$ 40,000-45,000 7) $45,000-50,000 8) $50,000-$55,000

  • I think per average income per capita in the U.S. is in the range1)Less than $20,0009) $55,000-$60,0002) $20,000-25,00010) more than $60,0003) $25,000-30,000 4) $30,000-35,000 5) $35,000-40,000 6)$ 40,000-45,000 7) $45,000-50,000 8) $50,000-$55,000

  • Correct answerU.S. Per capita income in 2006 was about $43,000.

  • If the average value product of labor is greater than the wage, a firm can increase its profits by hiring more labor.TrueFalse

  • With 4 workers, Avg Val Product is $90.That exceeds the wage. Will profits increase from hiring a fourth worker? No. See table. Example: Wage is $25

    workersv.outputAVPProfits1$200$200$1752$300$150$2503$350$116.66$2754$360$90$260

  • A profit maximizing firm will choose the amount of labor that maximizes the marginal value product of labor.TrueFalse

  • To maximize Marginal Value Product hire 1To maximize profits, hire 3.What does Marginal value product rule say?Hire additional labor so long as marginal value product exceeds the wage. Example: Wage is $25

    workersv.outputMVPProfits1$200$200$1752$300$100$2503$350$50$2754$360$10$260

  • If this firm maximizes profitsby hiring 3 workers, the wage must be between: $40 and $60$85 and $120$60 and $100$60 and $80$100 and $113.33

    Number workers.Value of output.1$2002$2403$3004$3405$350

  • Why is this?According to the marginal profit rule,Firm should add workers so long as marginal value product of labor exceeds wage. Marginal value product of third laborer is $60, marginal value product of 4th is $40. If wage is between $40 and $60, it pays to add third laborer, but not a 4th.

  • And on to our lecture

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