Dream Home Builders, a construction company, wants to make a decision on the quantity of labor to be hired. It has already emplo
yed 10 workers. Suppose the wage rate for construction workers is $30 per hour. The value of the marginal product of labor of hiring 11, 12, 13, 14, and 15 workers is $70, 562, 548, $27 and $14 per hour respectively When Dream Home Builders employs 11 workers, it can increase profts by workers. Dream Home Builders optimizes by employing a total of workers the market wage changes to $27, Dream Home Builders would the number of workers employed to The curve depicting the value of the marginal product of labor is also the labor curve
2 answers:
Answer:
Explanation:
It can boost the profits by employing more workers.
Dream Home Builders optimizes by hiring a full amount of 13 workers (VMP = Cost of labor).
Whenever the market pay adjust to $27, Dream Home Builders would boost the amount of their workers that are hired to 14 workers.
The curve portraying the value of marginal product of labor is the same thing as the labor demand curve.
A diagram solution to the question can be seen in the attached image below
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Answer:
b. In the first economy, the spending multiplier is greater than in the second economy. In the third economy, the spending multiplier is undefined
Explanation:
This can be easily understood by going through some calculations in a spending multiplier formula.
WORKINGS
The formula for Spending Multiplier =
Spending Multiplier
Economy 1: Multiplier = = 2
Economy 2: Multiplier = = 1
Economy 3: Multiplier = = undefined
Note: MPS can be abbreviated as Marginal propensity to save
As we can see here economy 1 is 50% greater than economy 2 and economy 3 is undefined because they spend whole dollar they earn additionally.
On behalf of the above calculations, option B is a perfect match!