dolution

 

1. Fill in the blanks to make the following statements correct. Each firm is assumed to be hiring factors in competitive markets.

 

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a. A tax-preparation firm produces completed tax returns (one unit of output), which produce revenue of $50 per unit. The firm hires labour for $22 per hour. If the last hour of labour hired produces 0.25 units of output, that hour’s MRP is ______. The last hour contributes ______ to the firm’s profits. The firm should hire (more/fewer/the same) hours of labour in order to maximize its profits.

 

b. An excavation company digs holes (one unit of output), which produce revenue of $100 per unit. The firm pays a rental price of $200 per day for a backhoe. The last day hired of this machine produces three units of output. This factor’s MRP is ______. The last day rented contributes to the firm’s profits. The firm should hire (more/fewer/the same) day-rentals of the backhoe in order to maximize its profits.

 

c. A software developer produces software programs (one unit of output), which produce revenue of $12 000 per unit. The firm hires programmers for $6000 per month. If the last month of labour hired produces 0.5 units of output, the MRP for the last month hired is ______. This last unit of the factor contributes ______ to the firm’s profits. This firm should hire (more/fewer/the same) months of labour in order to maximize its profits.

 

 
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