You were recently hired to replace the manager of the Roller Division at a major conveyor manufacturing firm, despite the manager's strong external sales record. Roller manufacturing is relatively simple, requiring only labor and a machine that cuts and crimps rollers. As you begin reviewing the company's production information, you learn that labor is paid $12 per hour and the last worker hired produced 150 rollers per hour. The company rents roller cutters and crimping machines for $24 per hour; and the marginal product of capital is 150 rollers per hour. What do you think the previous manager could have done to keep his job?

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There is a very simple reason why the manager was replaced. The reason being the value of marginal product of the last unit of capital, and the last unit of labor was not the same. First let us look at labor. Labor is paid $12 per hour, and the last hired worker produced 150 rollers per hour. The marginal product of labor is 150, and the price for that marginal output is $12. Therefore, the ratio of marginal product to the price paid for it is:

(Marginal Product)/(Price) ...

Solution Summary

This solution provides a step by step response which illustrates how to calculate the ratio of marginal product to the price paid. This is all completed in about 340 words. This response also provides reasoning as to why the previous manager is being replaced.

Which of the following relationships is correct?
a. When marginalproduct starts to decrease, marginal cost starts to decrease.
b. When marginal cost starts to increase, average cost starts to increase.
c. When marginal cost starts to increase, average variable cost starts to increase.
d. When margina

A firm uses two variable inputs, labor (L) and raw materials (M), in producing its output. At its current level of output:
CL = $10/unit MPL = 25
CM = $2/unit MPL = 4
a) determine whether the firm is operating efficiently, given that its objective is to minimize the cost of producing the given level of output.
b)

You have been hired to manage a small manufacturing facility which has cost and production data given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000

The table below presents estimates of the maximum levels of output possible with various combination of two inputs.
Capital (K)
5 11 25 37 47 51
4 10 23 33 41 44
3 8 18 25 30 34

You are theproduction manager at a steel plant, where all of the capital investment has been made for the next year. The only input you control is the amount of labor, which is priced at $15 per unit. Fill in the blanks in the following table and answer the question below.
Labor Total Marginal Average

Suppose that a firm maximizes its total profits and has a marginal cost (MC) of production of $8 and the price elasticity of demand for theproduct it sells is (-)3. Find the price at which the firm sells theproduct. (Use equation (3012) and to maximize the profits, MR has to equal MC.
Please show all work and explain answer

I need help with this problem:
(a) From table 6-1 constrcut a table similar to table 6-2 showing the total product, themarginalproduct, and the average product of lablor, as well as the output elasticity of lablr, when capital is kept constant at 4 units rather than at 1 unit. (b) Draw a figure similar to figure 6-4 showing