Explain how the firm would use the marginal product of labour to determine the profit maximizing quantity of labour, which the firm would hire?

Md Ariful Islam

0 like 0 dislike
1 views
Share with your friends

1 Answers

Md Ariful Islam

Call
The general rule is that firm maximizes profit by producing that quantity of output where marginal revenue equals marginal costs. The profit maximization issue can also be approached from the input side. That is, what is the profit maximizing usage of the variable input? To maximize profit the firm should increase usage of the input up to the point where the input's marginal revenue product equals its marginal costs. So mathematically the profit maximizing rule is MRPL = MCL, where the subscript L refers to the commonly assumed variable input, labor. The marginal revenue product is the change in total revenue per unit change in the variable input. That is MRPL = ∆TR/∆L. MRPL is the product of marginal revenue and the marginal product of labor or MRPL = MR x MPL.
0 like 0 dislike
1 views
Talk Doctor Online in Bissoy App
In an economy labour supply: w=20+4L, labour demand: w=50-2L. Labour is organized in a Union acting as a monopolist. Find the level of labour employed in the economy and the unemployed one

Labour supply: w=20+4L, labour demand: w=50-2L.Labour is organized in a Union acting as a monopolist. We should find the level of labour employed in the economy in the point where...

1 Answers 1 views
A profit-maximizing firm with variable labour and capital will always produce at the minimum point of the long run average cost curve. True false or uncertain

A profit-maximizing firm with variable labor and capital will produce at the minimum point of the long run average cost curve only in the long run and will receive normal...

1 Answers 1 views
At L=4, K=4, the marginal product of labour is 2 and the marginal product of capital is 3. What is the marginal rate f technical substitution?

At L=4, K=4 MPl = 2, MPk = 3. Marginal Rate of Technical Substitution (MRTS) is the amount by which the quantity of one input has to be reduced when...

1 Answers 1 views
if the cost of the skilled labour is three times the cost if unskilled labour,, the profit maximizing firm will vary the quantity of each type of labour until ?

The profit maximizing firm will vary quantity of each type of labour until quantity of unskilled labor is three times of skilled labour

1 Answers 1 views
How does a competitive firm determine its profit-maximizing level of output? Explain. • When does a profit-maximizing competitive firm decide to shut down? When does it decide to exit a market?

A profit maximizing competitive firm sets price equal to its marginal cost. If price were above marginal cost, the firm would increase its profits by increasing outputs, while if price...

1 Answers 1 views
Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.

answerWhen market prices are greater than the firm's average variable cost, firms are able to meet the costs associated with production; such as cost of raw materials, labour and operations;...

1 Answers 1 views
Explain the concept of value of marginal product of labour. How is the labour demand curve related to value of marginal product of labour curve?

The marginal product of labor is expenses by unit, the value of the final product, which increases with each additional unit of labor used. When the marginal costs are equal...

1 Answers 1 views
Even if workers would work for free, a profit maximizing firm would not hire more than units of labor. a. 3 b. 4 c. 5 d. 6 Kindly tell which is right answer and why

Theory states that a profit maximizing firm will hire workers up to the point where the marginal revenue product is equal to the wage rate, because it is not efficient...

1 Answers 1 views
6.1 The goal of any firm is to maximise profit, discuss the two (2) rules of profit maximisation for a firm. (15 marks) 6.2 Discuss ANY FIVE (5) features of a firm under oligopoly. (5 marks)

6.1 The goal of any firm is to maximise profit, so the two rules of profit maximisation for a firm are: shut-down rule (firm should cover at least its variable...

1 Answers 1 views
If a perfectly competitive firm’s marginal cost is greater than its marginal revenue at its current level of production, what must the firm do to increase its profit?

If a perfectly competitive firm’s marginal cost is greater than its marginal revenue at its current level of production, then the firm must decrease production to increase and maximize its...

1 Answers 1 views
X