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ikadub [295]
2 years ago
9

Larry’s Lumber Mill sells lumber in a perfectly competitive product market. However, Larry’s Lumber Mill is the only employer of

labor in the small community where it is located. The labor market is depicted by the graph above. (a) Using the labels from the graph above, identify each of the following. (i) The optimal quantity of labor Larry’s Lumber Mill will hire (ii) The wage rate Larry’s Lumber Mill will pay (b) Using the labels from the graph above, identify the number of workers Larry’s Lumber Mill would hire if the labor market were perfectly competitive. (c) Because of growing housing demand, the price of lumber increases. What will happen to each of the following? (i) Larry’s Lumber Mill’s demand for labor. Explain. (ii) The supply of labor

Advanced Placement (AP)
1 answer:
ch4aika [34]2 years ago
7 0

Answer:

a(I).Q4, (ii). W3.

(b). Q4.

(c). (i) and (ii). Check Explanation

Explanation:

Note: Kindly check the attachment for the graph. The solution to the question is given below;

(a). Using the labels from the graph above, identify each of the following.

(i) The optimal quantity of labor Larry’s Lumber Mill will hire will be at a point in which marginal cost = marginal revenue which is point Q4

(ii). The wage rate Larry’s Lumber Mill will pay is at a point in which the Marginal revenue = marginal cost that is at point W3.

(b). Using the labels from the graph above, the number of workers Larry’s Lumber Mill would hire if the labor market were perfectly competitive is Q4.

(c). (i). Larry’s Lumber Mill’s demand for labor increase which will cause a shift to the right on the demand curve. This is so, because as the demand for housing increases, the demand for lumber will increase too.

(ii). The supply is lesser than the demand which will cause a shift to the left on the supply curve.

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