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kaarnold98 kaarnold98
wrote...
Posts: 341
3 days ago

Table 17-6

Number of HairdressersHaircuts per DayMarginal ProductMarginal Revenue Product
1  8
216
323
429
534
638

Refer to Table 17-6. The Hair Cuttery, a new hair salon, is ready to start hiring. The table above shows the relationship between the number of hairdressers the firm hires and the quantity of haircuts it produces.

a.

Suppose the price of haircuts is $8. Complete the table by filling in the values for marginal
product and marginal revenue product.

b.

The Hair Cuttery is an input price-taker. Suppose the wage paid to hairdressers is $40 per
day. What is the profit-maximizing number of hairdressers?

c.

Suppose the wage rate rises to $60 per day.

(i) What happens to the firm's demand curve for hairdressers?

(ii) What happens to the profit-maximizing quantity of hairdressers?

d.

Suppose the wage rate is $40 per day and the price of haircuts is now $10.

(i) What happens to the firm's demand curve for hairdressers?

(ii) What happens to the profit-maximizing quantity of hairdressers?

Textbook 

InMicro


Edition: 1st
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joanametjoanamet
wrote...
Posts: 324
3 days ago
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a.

Number of HairdressersHaircuts per DayMarginal ProductMarginal Revenue Product
1  88$64
2168  64
3237  56
4296  48
5345  40
6384  32

b.

The profit-maximizing number of hairdressers is 5, where the marginal revenue product
equals the wage rate.

c.

(i) The demand curve does not change.

(ii) The profit-maximizing quantity of hairdressers falls to 2.

d.

(i) The demand curve shifts to the right.

(ii) The profit-maximizing quantity of hairdressers increases to 6.

1

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