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zbuild007 zbuild007
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3 weeks ago
Shifts in the Labor Demand Curve

For Marginal Manufacturing, the marginal product of labor is MPL = 30 – 3.75L, where L is the number of workers. Marginal sells output for $12 per unit. How many workers will Marginal hire when the wage is $50? If the output price increases to $48 a unit, Marginal will hire ________ (more/less) workers.
Please round your answer to the nearest whole number.

▸ 97 workers, less

▸ 97 workers, more

▸ -5 workers, more

▸ -5 workers, less
Textbook 

Macroeconomics


Edition: 3rd
Authors:
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drdaviddrdavid
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3 weeks ago
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97 workers, less

For the firm, profit is maximized when the value of the marginal product (VMP) from the last worker equals the wage.
Wage = VMP = MP*Price of Product
50 = (30 - 3.75L)*12 = 30*12 - 3.75*12*L = 360 - 45*L
45*L = 360 - 50 = 310
L = 310/45 = 97 workers

When Price of Product = $48
Wage = VMP = MP*Price of Product
50 = (30 - 3.75L)*48 = 30*48 - 3.75*48*L = 1440 - 180*L
180*L = 1440 - 50 = 1390
L = 1390/180 = 8 workers, which is 2 workers.
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zbuild007 Author
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3 weeks ago
I appreciate what you did here, answered it right Smiling Face with Open Mouth
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Thank you, thank you, thank you!
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