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Why is demand for labor curve downward sloping?
I believe in economics we assume that firms are rational and because of this a rational firm would not employ additional labor if it caused a decline in the total output of the firm.
Until when does a profit maximizing firm use additional units of resources for production?
Until it reaches the point of diminishing returns. After that point, one additional unit of resources cannot be used profitably.
A firm will only employ additional workers to what point?
When the marginal gains from hiring that employee are less than the cost of the employee. I.e. if the employee costs $40,000, but the firm only nets $30,000, that employee will not be hired. _____ Theoretically, when the value produced by that worker, or their return on investment isn't high enough... but that gets mixed up with a lot of political stuff plus a desire to make money without regard to improvement of the product, so sometimes the resultant value isn't even factored in. Spending is just frozen unless it inhibits the decision-maker's personal goals.
What is the relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm?
The relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm is that the firm should produce at a level where marginal revenue equals marginal cost. This is because at this point, the firm maximizes its profits by balancing the additional revenue gained from producing one more unit with the additional cost of producing that unit.
What is the additional revenue that accrues to a firm when an additional worker is hired?
marginal revenue product
How do companies determine wages for employees?
By the equilibrium between supply and demand for workers
Why is demand for labor curve downward sloping?
I believe in economics we assume that firms are rational and because of this a rational firm would not employ additional labor if it caused a decline in the total output of the firm.
Until when does a profit maximizing firm use additional units of resources for production?
Until it reaches the point of diminishing returns. After that point, one additional unit of resources cannot be used profitably.
A firm will only employ additional workers to what point?
When the marginal gains from hiring that employee are less than the cost of the employee. I.e. if the employee costs $40,000, but the firm only nets $30,000, that employee will not be hired. _____ Theoretically, when the value produced by that worker, or their return on investment isn't high enough... but that gets mixed up with a lot of political stuff plus a desire to make money without regard to improvement of the product, so sometimes the resultant value isn't even factored in. Spending is just frozen unless it inhibits the decision-maker's personal goals.
What can happen if the MRP is greater then a firm's MC?
The firm can afford to hire more workers
What can happen if the MRP is greater than a firm's MC?
The firm can afford to hire more workers.
What is the relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm?
The relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm is that the firm should produce at a level where marginal revenue equals marginal cost. This is because at this point, the firm maximizes its profits by balancing the additional revenue gained from producing one more unit with the additional cost of producing that unit.
What is the additional revenue that accrues to a firm when an additional worker is hired?
marginal revenue product
What is additional revenue a firm gains when it hires an additional worker called?
Marginal Revenue Product
What is the additional revenue a firm gains when it hires an additional worker called?
Marginal Revenue Product
How does specialization by workers benefit the firm's employing them?
Workers who specialize become more efficient and thereby increase productivity.
Why is the profit maximizing point when MRMC?
The profit-maximizing point occurs when marginal revenue (MR) equals marginal cost (MC) because at this point, the additional revenue gained from selling one more unit is equal to the additional cost of producing that unit. This ensures that the firm is maximizing its profits by producing the optimal quantity of goods or services.
