Temple University

Economics 52

 

Name

 

Demand for Inputs in Imperfectly Competitive Markets

Bijou Photographic, Inc. has hired a summer intern to work in its facility down on the bayou. Billy Bob has carefully studied the annual reports, the firm's hiring history and production statistics and has come up with the following set of tables.

Production Function

Demand Schedule

Labor Supply

Labor

Cans of Film

 Margnal Product of Labor

Price

Cans of Film

 Marginal Revenue

Wage

Workers

 Marginal Input Cost

0

0

6

0

 --

11.50

0

 --

1

5

5

5

12

1

2

10

4

10

13.5

2

3

15

2

15

14.5

3

4

19

1

19

15.5

4

5

22

0

22

16.5

5

Your job as management consultant, should you accept it, is to help Bijou determine the profit maximizing level of employment.  Begin by completing the table.

How many workers should Bijou hire?  (Hint: Compute marginal revenue product and find where it equals the marginal cost of hiring another worker.)

What wage should be paid ?