Question

Wage Rate Quantity of Labor Demanded $16 800 14 1,000 12 1,200 10 1,600 8 1,800Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $10 to $12. As a result of the wage increase,

firms will hire fewer workers, but the total paid out for wages will remain unchanged.

fewer workers, but the total paid out for wages will increase. more capital,

if capital and labor are used in fixed proportions in production.

fewer workers and the total paid out for wages will decline.

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars.

Stadium	Total Cost	Total Benefit
A	$ 80	$140
B	100	200
C	130	250
D	165	290
E	220	300

The marginal cost and marginal benefit of stadium B (relative to A) are

$20 million and $60 million, respectively.

$20 million and $50 million, respectively.

$30 million and $50 million, respectively.

$100 million and $200 million, respectively.

1. Units of Resource	Total Product
   1	24
   2	42
   3	54
   4	64
   5	72

   The table shows a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. If the firm's product sells for a constant $2 and the price of the resource is a constant $16, the firm will employ how many units of the resource?

   		2
   		5
   		4
   		3

Answer 1

A) Marginal cost of stadium B=change in total cost=100-80=20 million

Marginal benefit of B= change in total benefit=200-140=60 million

OPTION A is correct

B)firm Profit Maximizing hiring of input is where,

Marginal product* price of good= price of input

Marginal product=price of input/price of good

Marginal product=16/2=8

So firm will hire that unit of input where marginal product is 8.

So at unit=5 , Marginal product=72-64=8

So firm will hire 5 units of inputs