Microeconomics – Week #7 Assignment

Labor and Wages

  

The following chart provides information on 

 

a firm that hires labor competitively and sells

 

its product in a competitive market.

        

Units of Labor


Total Output


Product Price

 

1


14


$5 

 

2


26


$5 

 

3


37


$5 

 

4


46


$5 

 

5


53


$5 

 

6


58


$5 

a. How many units of labor would be employed if the market wage rate were $40? Why?

b. What would happen to employment if the wage rate rose to $50? Explain your answer.