Question:

Determining Optimal Choice from Graphs in Labor Markets Questions (Check Work)?

by Guest57886  |  earlier

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#1 - http://i37.tinypic.com/5zi6g1.jpg (MRP and Wage Rate Curves – determine optimal amount of workers employed each day – I’ve already marked in dashed lines, but I’m wonder if I placed it in the correct place)

#2 - http://i34.tinypic.com/16ixiqv.jpg (MC and Market Price Curves – I need to know if I placed the optimal choice in the right area)

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  1. #1 - Right, W=$60 per day and L=4

    Since labor supply curve is horizontal it means that firm works in perfectly competitive environment (factor-market).

    #2 - Right too, MR=P=$10 and Q=36, the same situation of perfect competition, but for product-market, optimal profit-maximization condition MR=MC.

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