Labor Economics (3 problems)

Suppose the marginal revenue product of labour in a local factory is MRPL = 20 – 0.5L, where L is the number of workers employed. If the wage of factory workers is $10 per hour, how many workers will the factory hire?

Consider a factory that employs two kinds of workers: production workers and supervisors. The factory sells its output for $0.50 per unit. The firm currently employs 50 production workers at a wage of $100 per day. The firm cannot adjust the number of production workers it employs in the short run, but it can adjust the number of supervisors it employs. The daily wage of supervisors is $500, and you have the following information about the firm’s daily (short run) production:

How many supervisors should the firm hire?

James Barnes owns a strawberry farm and hires students to pick and pack strawberries. The following table represents the amount of strawberries the students can pick and pack in one hour.

The Barnes' can sell the strawberries for $0.50 per kilogram and the wage rate for students is $8.50 per hour.

a) Calculate the marginal product and the marginal revenue product for the students and draw the respective curves

b) Draw Mr. Barnes demand for labour curve. How many students does he employ?

c) Now assume that the price of strawberries falls to 30 cents a kilogram, but students wages remain the same at $8.50 an hour. Answer the above 2 questions in the context of the new information.