Refer to above figure. If OmL1 workers are employed in manufacturing then what is the marginal productivity of labor in manufacturing?
What will be an ideal response?
OmWm.
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Which of the following events would increase the supply of tomatoes?
a. the introduction of mechanized tomato pickers, which raises the cost of production b. an increase in wages for the tomato pickers c. a decrease in the cost of fertilizer for the tomato plants d. unseasonably hot, dry weather in the tomato-growing regions of the nation e. a decrease in the price of pasta products
When economists say that an activity meets the criterion for economic efficiency, they mean
a. a majority of citizens favor the activity. b. the benefits that result from the activity exceed the costs. c. the number of people who gain from the activity exceeds the number on whom costs are imposed. d. the costs that result from the activity exceed the benefits.
Answer the following statement(s) true (T) or false (F)
1. To know if the addition of a worker will add to a firm’s profits you must know both the marginal revenue product and the marginal resource cost. 2. Marginal revenue product is calculated by multiplying the marginal product times the marginal resource cost. 3. The equilibrium wage (W*) is the median cost of labor, with half of the workers making more and half making less. 4. The substitution effect describes the tendency of workers at a low wage rate to have a high rate of absenteeism. 5. If the substitution effect is stronger than the income effect, the individual’s labor supply curve is backward bending.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.