Econ 102 Module 11 Assignment (Chapter 9)

General Instructions: Please provide your answers to the following in the spaces provided, and then upload your finished document to WebCampus. Don’t forget to save a copy of your document before turning it in.

Technical Instructions:

  • If you need to draw a straight line: Click Insert, Shapes, select the straight downward sloping line. At this point, the cursor should change to a + sign. Position the plus sign over the point where you want to start the line, click and hold the left mouse button, then drag the line to the point where you want the line to end. Release the mouse.Then you can move the line around by clicking on the line and adjusting it in various ways.
  • If you need to draw a curved line: Click Insert, Shapes, select the shape called "arc." At this point, the cursor should change to a + sign. Position the plus sign over the point where you want to start the curved line, click and hold the left mouse button, then drag the line to the point where you want the line to end. Release the mouse.Then you can move the line around by clicking on the line and adjusting it in various ways. Clicking on the green handle at the top of the curve allows you to rotate the curve.
  • If you need to draw a label of any kind: Click Insert, Text Box, Simple Text Box. You can then type inside the box, and move it around by clicking on the handles on the perimeter of the box.
  • If you need to color a line or curve: Right click on the line, select Format Auto Shape, Color. You can also change the line to a dotted line from this screen as well.

If you are using Open Office or some other word processor, the steps will be quite similar, but not exactly the same. In any case, do some experimenting and get some help if necessary; and you will do fine. This is not an art class, and I don’t expect perfection in these matters.

[Each question on this assignment is worth 1 point, for a total of 10 points for this assignment.]

  1. The Rothbard Corporation has, in months past, produced320snagits per month with a work force of 90 identical workers, and it is considering adding a few more workers. The production of each snagit takes $12 worth of raw materials in addition to the labor associated with producing the snagit. The output per month is related to the number of workers in the ways indicated by the first two columns of this table:

Number of Workers / Output
(Units per Month) / Marginal
Product / Marginal Revenue
PerUnit / MRP
(Combined
Labor &
Materials) / MRP
(Materials Only) / MRP
(Labor Only)
90 / 320 / ------/ ------/ ------/ --- / ---
91 / 350 / 30 / 52 / 1520 / 12
92 / 378 / 28 / 52 / 1456 / 12
93 / 404 / 26 / 52 / 1352 / 12
94 / 428 / 24 / 52 / 1248 / 12
95 / 450 / 22 / 52 / 1144 / 12
96 / 470 / 20 / 52 / 1040 / 12
97 / 488 / 18 / 52 / 936 / 12
98 / 504 / 16 / 52 / 832 / 12
99 / 518 / 14 / 52 / 728 / 12
100 / 530 / 12 / 52 / 624 / 12

Fill in the remainder of the table above, assuming that Rothbard Corporation is a price-taker who is able to sell its product at $52 per unit.

2. On the graph below, draw the relevant portion of the labor demand curve for Rothbard, and color it red.

3. In the relevant labor market faced by Rothbard, the number of workers and the associated monthly wage rate requirementsfor those workers are estimated in the table below. Draw the labor supply curve on the same graph above.

Required Wage Rate / Number of Workers
$1200 / 100
$1120 / 99
$1040 / 98
$960 / 97
$880 / 96
$800 / 95
$720 / 94
$640 / 93
$560 / 92
$480 / 91
$400 / 90

4.Under the scenario above, and assuming that Rothbard can hire each person for the salary each one is willing to work for, how many workers will Rothbard hire? ______

5. What wage rate will Rothbard pay the last worker hired? ______

6. Now let us consider a new development that has recently taken place. Rothbard’s employees have actively lobbied the legislature in recent months, and they have successfully persuaded the legislature to pass a law that requires Rothbard to provide employee health and safety benefits that amount to $330 per employee per month. After considering the effects of this new law, and assuming no changes in selling prices or worker productivity, fill in the blanks in the table below.

Number of Workers / Output
(Units per Month) / Marginal
Product / Marginal Revenue
PerUnit / MRP
(Combined
Labor &
Materials) / MRP
(Materials Only) / MRP
(Health & Safety
Benefits
Only) / MRP
(Labor Only)
90 / 320 / ------/ ------/ ------/ --- / --- / ---
91 / 350
92 / 378
93 / 404
94 / 428
95 / 450
96 / 470
97 / 488
98 / 504
99 / 518
100 / 530

7.In the same original graph above, draw the new labor demand curve that reflects the new labor law, and, if not too difficult, color it green.

8.Assuming that Rothbard is able to pay each worker the wage that each one is willing to accept, how many workers will he employ after the institution of the new labor law? ______

9. What will be the new wage rate for the last worker hired after the institution of the new labor law? ______

10.From a serious contemplation of the lessons learned from this assignment, who eventually bears the financial burdens of the health and safety benefits that are mandated by the new law? [Hint: It is either workers or their employers.] ______