Then, we can analyze the situation as in Figure 16.1. The supply of work will then be 24 minus the amount of leisure. To analyze the supply of labor, it is useful to redefine the question: Instead of studying the supply of labor, we will study the demand for leisure. There are 24 hours in a day, which sets an upper bound for how much labor a worker can sell. We will assume that the workers prefer leisure to work and that they work for, and only for, the wage. We study cases in which either the firm, or the workers, or both of them are in a monopoly position or in a perfectly competitive situation.

We will study the cases when the output market is a perfectly competitive market and when it is a monopoly market.įurthermore, the structure of the labor market also affects the outcome. the market where the firm sells its goods, will also affect what the firm will be willing to pay in wages since it is in the output market that the price is set. This means that the structure in the output market, i.e.

The firm will consequently hire workers until the last produced unit of the good costs as much to produce as the firm is paid for it. The firm’s cost of labor is the wage, and its revenue of labor is the price at which they can sell the goods. Where Q indicates the number of copies sold and P is the price in Ectenian dollars.From the firm’s perspective, it buys labor as long as that gives a positive contribution to its profit. Information about the demand and production costs of its new DVD: Based on market research, a film production company in Ectenia obtains the following Explain theį) Compare the column for average total cost and the column for marginal cost. (Recall that MC=?TC/?Q.) What pattern do you see?Į) Compare the column for marginal product and the column for marginal cost. (Recall that ATC=TC/Q.) What pattern do you see?ĭ) Now fill in the column for marginal cost. Use this information to fill in theĬ) Fill in the column for average total cost. What pattern do you see? How might you explain it?ī) A worker costs $100 a day, and the firm has fixed costs of $200. Workers Output Marginal Product Total Cost Average Total Cost Marginal CostĪ) Fill in the column of marginal products. Here is the relationshipīetween the number of workers and Nimbus’s output in a given day:

Nimbus, Inc., makes brooms and then sells them doorto-door. (c Assume that Chen uses the average cost method.Compute both cost of good sold for the current period and the ending inventory balance Ending inventory balance$0 x Ending inventory balance$57,600 xī Assume that Chen uses the last-in,first-out method.Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period. Compute both cost of good sold for the current period and the ending inventory balance. Thank you!Īpplying and AnalyzingInventory Costing Methods At the beginning of the current period,Chen carried 1,000 units of its product with a unit cost of $30.A summary of purchases during the current period follows.During the period,Chen sold 2,800 units (Chapter 6) Please answer all questions with a red X next to them. Report the largest amount of income for the period? Reflect what is probably the physical flow of goods?ģ. (d) Which of these three inventory costing methods would you choose to:ġ. (c Assume that Chen uses the average cost method.Compute both cost of good sold for the current period and the ending inventory balance Ending inventory balance0 x

Ending inventory balance57,600 xī Assume that Chen uses the last-in,first-out method.Compute both cost of good sold for the current period and the ending inventory balance. Thank you!Īpplying and AnalyzingInventory Costing Methods At the beginning of the current period,Chen carried 1,000 units of its product with a unit cost of 30.A summary of purchases during the current period follows.During the period,Chen sold 2,800 units SOLVED: (Chapter 6) Please answer all questions with a red X next to them.

Marginal revenue of the last worker