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kickergb40 kickergb40
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A year ago

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour.

Short description: A graph plots units of labour against dollars. Long description: The horizontal axis represents units of labour. The vertical axis represents dollars. The graph plots three curves. Three curves represent M R P subscript 3, M R P subscript 1, and M R P subscript 1. M R P subscript 3 passes through the following points: (80, 16) and (100, 12). M R P subscript 1 passes through the following points: (120, 16) and (140, 12). M R P subscript 2 passes through the following points: (160, 16) and (180, 12).

FIGURE 13-1

Refer to Figure 13-1. Suppose this firm is facing MRP1, a wage rate of $16 per hour and is employing 100 units of labour. At this level of employment,



▸ the last unit of labour is adding more to the firm's cost than it is adding to the firm's revenue, so it should reduce the use of labour.

▸ the last unit of labour is adding less to the firm's cost than it is adding to the firm's revenue, so it should increase the use of labour.

▸ the firm has shifted the MRP curve to MRP2.

▸ the last unit of labour contributes as much to the firm's costs as to the firm's revenues and so the firm should not change its use of labour.

▸ the firm has shifted the MRP curve to MRP3.
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Microeconomics

Microeconomics


Edition: 17th
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heavenlyangelheavenlyangel
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