Economics
Chapter 10
- What is the optimal hiring rule?
The Optimal hiring rule is a guideline which stipulates that a firm continues to hire workers provided that the marginal revenue product of labor remains higher than the wages paid.
- What are the factors that cause changes in labor demand? What are the factors that cause changes in labor supply?
Factors that cause changes in labor demand include;
- The output price
- Consumer demand
- Technological changes
- Consumer preference
- Increase in productivity
- Employment subsidy
Factors that cause changes in labor supply include:
- Changes in tastes
- Changes in alternative opportunities
- Population growth
- How does investing in your own higher education increase your earnings?
Higher education is key to economic development and is therefore essential in helping individuals get more earnings. With higher education, the individual gets the skills and knowledge to get well paying jobs that go a long way into increasing their earnings. It opens up opportunities in fields like medicine and engineering and being a professional in such sectors ensures that one will receive higher earnings.
|
Quantity of Labor (thousands) |
Marginal Revenue Product |
Total Labor Cost |
|
5 |
$25 |
$5 |
|
10 |
20 |
10 |
|
15 |
15 |
15 |
|
20 |
10 |
20 |
|
25 |
5 |
25 |
- Using the chart above, when the marginal revenue product is $20.00, firms should
- Stop hiring workers
- If marginal product equals 8 and product price equals $100, what would the marginal revenue product equal?
