Questions by okey43 - Page 32
Leisure Times, Inc., employs skilled workers and capital to install hot tubs. The capital includes the tools and equipment workers use to construct and install the tubs. The installation services are sold in a competitive market for $1,000 per hot tub. Leisure Times is able to hire workers for $3,500 per month, including the cost of wages, fringe benefits, and employment taxes. The increase in the number of hot tubs installed as additional workers are hired is indicated in the following table Complete the third and fourth columns of the table by computing the marginal product as the number of employed workers changes and the marginal revenue product for each unit of labor when the competitive price for a hot tub is $1,000 Number of Workers Employed Number of Hot Tubs Installed Marginal Product Marginal Revenue Product (Hot Tub Installation Price = $1,000) Marginal Revenue Product (Hot Tub Installation Price = $900) 12 18 23 27 30 32 2 3 4 8 If Leisure Times is able to hire workers for $3,500 per month, it should hire workers to maximize its profit. Suppose the wages of skilled workers fall to $2,500 per month At this new wage, the firm should hire workers to maximize its profit.
Suppose the most productive use of a particular site is as a manufacturing plant that will generatr revenues of $17,000,000 per yesr with raw material costs and operatinf expenses (orher than net rent) of $8,000,000 per year, and construction costs (for the plant and equipment) that can be paid for with a perpetual loan with interest od $5,000,000 per year. according to the residual theory, how much is this site worth in terms of annual land rent? $30,000,000 $14,000,000 $20,000,000 $9,000,000 $4,000,000 $2,000,000