Answered: Show the three stages of production…

Show the three stages of production (c) Suppose the market price of the output Rs. 150 and the wage rate is Rs. 900, how many workers would this firm hire? What if the price decreases to Rs. 100?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter26: Factor Markets: With Emphasis On The Labor Market

Section26.1: Factor Markets

Problem 4ST

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Question

An SMSE has a production process with fixed lot size A. The table below shows the total output and the number of workers:

No. of Workers Total Output

0 0

1 10

2 30

3 50

4 56

5 59

6 60

7 60

8 58

(b) Show the three stages of production

(c) Suppose the market price of the output Rs. 150 and the wage rate is Rs. 900, how many workers would this firm hire? What if the price decreases to Rs. 100?

(d) Suppose the market price increases to Rs. 250, what is the highest wage rate the firm would be willing to pay to employ 4 units of labour?

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