Question

Consider a firm’s initial optimal employment level in the short run. Suddenly a positive technology shock...

Consider a firm’s initial optimal employment level in the short run. Suddenly a positive technology shock occurs such that EVERY employee is now able to produce an additional 15 units of output above what they were originally able to produce. What happens to employment at this firm:

  • Do employment levels increase, decrease, or stay the same?

  • EXPLAIN YOUR ANSWER. NO POINTS will be given if you do not EXPLAIN your choice.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

An additional increase in production by 15 units of output per employee due to positive technology shock indicate an increase in marginal physical product of employee by 15 units of output.

The demand for labor = Value of Marginal Product of the Labor = Marginal Revenue Product of Labor = Marginal Physical Product of the Labor * Price of the Product

VMPL = MRPL = MPPL * P

Thus, an increase in MPPL indicate increase in VMPL, implying rightward shift in the demand for labor curve.

When the supply of labor is upward sloping in the short-run, an increase in demand for labor would lead to increase in employment along with the wages.

When supply of the labor curve is horizontal, an increase in demand for labor would lead to increase in employment at a constant wage

On the other hand, when supply of the labor curve is vertical straight line, indicating a fixed supply of labor, an increase in demand for labor would not lead to increase in employment level. However, wage rate would increase proportionate to the increase in the demand for labpr.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume the economy is initially in long-run equilibrium. Explain briefly how short-run stagflation (recession combined high...
Assume the economy is initially in long-run equilibrium. Explain briefly how short-run stagflation (recession combined high inflation) results from an adverse supply shock. (Hint: Use AD-AS diagrams to show what happens to P and Y.) Suppose that stagflation occurs. To help economy go back to its full-employment output, how should the government use her budgetary tool that is based on corporate tax? Briefly explain your answer.
Consider a publicly available technology of producing a good that is characterized by the variable cost...
Consider a publicly available technology of producing a good that is characterized by the variable cost function VC (Q) = (1/2)Q2 and fixed costs FC = 2 for a firm that operates the technology. In the short run, fixed costs are unavoidable. In the long run, fixed costs are avoidable and it is free for any firm outside of the market to enter, should it want to. In the short run, the set of firms in the market is fixed....
1. In the short run, the firm ________ change the number of workers it employs but...
1. In the short run, the firm ________ change the number of workers it employs but ________ change the size of its plant. A) can; can B) can; cannot C) cannot; can D) cannot; cannot 2.Jill runs a factory that makes lie detectors in Little Rock, Arkansas. This month, Jill's 34 workers produced 690 machines. Suppose Jill adds one more worker and, as a result, her factory's output increases to 700. Jill's marginal product of labor from the last worker...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer....
Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer. ____ 2. Consumers should purchase quantities of a good to the point where MU > P. ____ 3. Voluntary exchange requires that there must be mutual gain. ____ 4. Points along a budget line represent the maximum combinations of two commodities that a consumer can afford. ____ 5. The budget line represents a consumer's preferences for a commodity. ____ 6. A change in consumer...
provide 3-4 paragraphs post (team 2) 1-What are 4 key things you learned about the topic...
provide 3-4 paragraphs post (team 2) 1-What are 4 key things you learned about the topic from reading their paper? 2-How does the topic relate to you and your current or past job? 3-Critique the paper in terms of the organization and quality.1- Employee Stress and how it has an Adverse Effect on a Company This paper explores employee stress and how it has an adverse effect on a company, its employees and the organization. Job stress can have a...
1. Which is the most accurate definition of the study of economics? [1] Distributing surplus goods...
1. Which is the most accurate definition of the study of economics? [1] Distributing surplus goods to those in need. [2] Dealing with affluence in a morally bankrupt world. [3] Using scarce resources to satisfy unlimited human wants. [4] Reducing human wants to eliminate the problem of scarcity. 2. Computer software represents [1] labour. [2] land. [3] capital. [4] entrepreneurship. 3. Suppose you have graduated with a degree in accounting and are offered a job with an accounting firm. But...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president by working to build good work relationships with other managers outside her own department. Brianna's behavior should be viewed as dysfunctional politics. functional politics. coercive power. functional influence. 2 points QUESTION 2 1. The Gingerbread Factory has a separate unit that makes their chocolate crunch cookies and another unit that is completely responsible for all operations in producing their ginger snap cookies. The Gingerbread...
1. What is an ISP (Integrated Service Provider) for supply chains? (1 point) A. A consultant...
1. What is an ISP (Integrated Service Provider) for supply chains? (1 point) A. A consultant agency which integrates the supply chain for companies B. A 2 PL or a 3PL, but not a 4PL C. A company supplying transportation and warehousing services D. A logistics service company specialized in suppling VAS (value added services) 2. What characterizes a 4 PL? (1 point) A. They are non-asset based and provides integrated services primarily supplied by asset based providers, for example...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT