Tutorial 8 based on lectures 22-24 (TG) complete solutions correct answers key Find the solution at http://www.coursemerit.com/solution-details/15162/Tutorial-8-based-on-lectures-22-24-TG-complete-solutions-correct-answers-key

1. Tutorial 8 based on lectures 22-24 (TG) complete solutions correct answers key
Find the solution at
http://www.coursemerit.com/solution-details/15162/Tutorial-8-based-on-lectures-22-24-TG-complete-solutions-correct-answers-key
1. A firm making lawnmowers has an existing factory and machinery but can vary
the number of workers it hires. The following are data for total numbers of
lawnmowers produced per week when hiring between 7 and 16 workers.
Workers per week Lawnmowers
produced per week
7 99
8 110
9 120
10 129
11 137
12 144
13 150
14 155
15 159
16 162
(a) Calculate the marginal physical product of workers number 8 to 16.
(b) Calculate the marginal revenue product of each worker if the lawnmowers can
all be sold at £100.
(c) How many workers will this firm wish to hire if it is profit-maximizing and the
going wage is £500 per week?
2. Suppose that the firm has the same production relationships as in question 1 but
faces a downward-sloping demand curve for lawnmowers. The demand curve is
p = 400 – 1Q (so the marginal revenue curve is MR = 400 – 2Q), where Q is the
output of lawnmowers per week. If workers can again be hired at £500 per week,
how many workers will be hired?
3. Is the high price of hotel rooms in central London determined by high demand or
by the scarcity of land on which hotels can be build (or something else)?
4. Rank the following occupations in terms of the likely proportion of rent (compared
with transfer earnings) in typical earnings: pop stars, professional footballers, taxi
drivers, computer consultants, university teachers, shop assistants, doctors.