What was the workers marginal product last year

Assignment Help Business Economics

Reference no: EM13741772

The HRB Corporation is the world’s only manufacturer of air filters for Zamboni engines. Last year, HRB charged $20 per filter and sold 1 million of them, and it paid all of its production workers $10 per hour. This year, something happened at HRB headquarters (not announced to the public) that caused HRB to lower its price to $18 per filter. (HRB is still a profit-maximizing company.) This enabled HRB to sell 1.2 million filters. Its workers all continue to earn $10 per hour.

A. What is the elasticity of demand for Zamboni air filters?

B. How much additional revenue does HRB earn if it sells one more air filter this year? How much additional revenue would HRB have earned if it sold one more air filter last year?

C. How much are HRB’s employees paid relative to the value they create? (That is, what is the ratio of the wage to the value of the worker’s marginal product (price x MPL)?)

D. What was the workers’ marginal product last year? What is it this year?

E. Suppose you are considering only two explanations for the increase in HRB’s output: (1) HRB invested in better equipment and kept the same number of workers, or (2) HRB hired more workers to use its existing equipment. Given your observations above, which makes more sense? Why?

Reference no: EM13741772

Questions Cloud

How in religions formed peoples lives in islam and hinduism : how in history religions formed people's lives in islam and hinduism?

Question regarding the inferential statistics : Using the research question and two variables your learning team developed, create a no more than 350-word inferential statistics (hypothesis test). Include:

Implemented a farm savings plan called agriinvest : Agriculture and Agri-Food Canada implemented a farm savings plan called AgriInvest that would help farmers navigate ‘shallow losses’ (differences between revenues and expenses that are not extreme).

Explain how the quantity of money drastically declined : Explain how the quantity of money drastically declined after WWI and partly caused the Great Depression.

What was the workers marginal product last year : The HRB Corporation is the world’s only manufacturer of air filters for Zamboni engines. Last year, HRB charged $20 per filter and sold 1 million of them, and it paid all of its production workers $10 per hour. What was the workers’ marginal product ..

Present and future values-expected returns : We examined two important topics in finance this week: (a) present and future values and (b) security valuation.

Explain why the reduction in employment would be less : Most industrial farms hire migrant workers, so the market for such workers is reasonably taken to be perfectly competitive. Suppose that all farms individually have a short-run elasticity of labor demand of –0.5. Explain why the reduction in employme..

Using the existing stock of farm machinery more intensely : Explain why the reduction in employment would be less than 5 percent in the latter case. In light of the short-run elasticity of demand for migrant workers, how easy do you think it would be for the industrial farms to replace the workers’ efforts by..

What does treasure of the sierra madre tell about americans : What does The Treasure of the Sierra Madre tell us about Americans' sense of national identity, comparable to what we saw in John Steinbeck's work.

User Account

All Pages