平狄克微观经济学第六版课后答案

of labor per hour since in this case the benefit still exceeds the cost at the margin.

The firm would stick with 3 units instead of 4 unless fractional units are possible.

At L=4 the cost is greater than the benefit so you lose profit by hiring the 4th unit of

labor.

c. Suppose the price of the product increases to $3 and the wage remains at $16 per

hour. Find the new profit-maximizing quantity of labor.

A change in the price of the product will not change the marginal product of labor,

but it will change the marginal revenue product of labor. The new marginal revenue

product of labor is given in the table below. The firm will still want to hire 5 units of

labor, as in part a above. It will not hire the 6th unit because the extra benefit is less

than the extra cost. Profit will be greater than in part a.

d. Suppose that the price of the product remains at $2 and the wage remains at $16,

but there is a technological breakthrough that increases output by 25% for any given level of labor. Find the new profit-maximizing quantity of labor.

The technological breakthrough changes the number of units of output produced by a

given number of units of labor, and hence changes the marginal product and the

marginal revenue product of labor. The new output values are found by multiplying

the old values by 1.25. This new information is given in the table below. The firm

will still choose to hire 5 units of labor. Profit will be greater than in part a.

2. Assume that workers whose incomes are less than $10,000 currently pay no federal income taxes. Suppose a new government program guarantees each worker $5,000, whether or not he or she earns any income. For all earned income up to $10,000, the worker must pay a 50-percent tax. Draw the budget line facing the workers under this new program. How is the program likely to affect the labor supply curve of workers?

The budget line for workers under this program is a straight line at $5,000. This line

is shown in the figure and table below. Workers earn $5,000 whether they work or not.