What is the relationship between a firm's value of marginal product curve for labor and its demand for labor curve? Explain why this relationship exists
What will be an ideal response?
The value of marginal product curve for labor is the same as the demand for labor curve. The curves are the same because of the firm's profit-maximizing decisions. In order to maximize its profit, a firm hires the number of workers that sets the wage rate equal to the value of marginal product. So at any wage rate, the firm uses its value of marginal product curve to determine how many workers to hire. But that is what the demand for labor curve shows: how many workers the firm hires at any wage rate. As a result, the value of marginal product for labor is the same as the firm's demand for labor curve.
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Which of the following statements is correct?
A) TC = TFC + TVC B) TC = average product + marginal product C) TC = TFC - TVC D) TC = average physical product - marginal physical product
An increase in the price of a good is shown by a:
A. rightward shift of the demand curve. B. leftward shift of the demand curve. C. movement up and to the left along the demand curve. D. movement down and to the right along the demand curve.