Chapter 18

Problem 5:
Given: By December the market price for fish comes down to 33.33 cents per pound and packers
retain the wage rate of $7.50 per hour.
Analysis:
Marginal Product of Labor (MPL): In fact, when the price of fish goes down, the value of every
extra fish packed goes down as well. Therefore, the MPL decreases.
Value of Marginal Product (VMP): VMP = MPL*price of fish; Both decrease – Hence, VMP
decreases large.
Demand for Labor: This tells us that a decline in VMP implies that Wanda is going to hire fewer
workers than the going wage rate. Therefore her demand for labor curve shifts leftwards.
Number of Students Employed: This is because when the levels of unemployment rises, Wanda
will be able to get few students to absorb into the organization due to high unemployment rates.

Problem 6:
Given: The market price at which the fish appears is 33.33 cents per pound and the packers’
wages per hour $7.50.
Analysis:
To determine the exact number of students Wanda employs, we would need to:
Calculate the new VMP curve: This means that new fish price to MPL would be incorporated at
each employment level.
Find the intersection of the new VMP curve with the wage rate: The utilization figure is the point
where the supply and demand of labour crosses on the labour supply and demand curve.
As we have not been given the specific data for MPL at different employment levels it is not
possible to determine the total number of students Wanda will be able to employ.

Problem 7:
Equity's Goal
Equity has the aim to protect gender and race equality of actors and stage managers to provide
them equal opportunities. They want to fight prejudice and advocate for equality within the live
theater business.

Problem 8:
There is nothing quite like Equity and its pursuit of greater diversity in the Orange County arts
community.
Equity seeks greater diversity for several reasons:
Equity: To make sure all the actors, singers and stage managers should be given equal chance in
the show They should also be treated equally.
Representation: It will change the diversity of the theater industry with emphasis on the cultural
diversity of the society to make the theatre more relevant to the community.
Talent: To tap into a larger talent base which would inform quality work and better productions.
Cultural Relevance: As a way to develop the culturally specific and diverse live performances.

Problem 9:
Shift the Demand for Female and Minority Labour
Equity can try to change the demand for female and minority labor in several ways:
Advocacy: By supporting Diversity and Inclusive approaches in the hiring of people for roles for
the theatre plays and performances.
Education: While awareness creation and sensitization campaigns that would ensure producers,
directors and casting agents understand the questions of diversity and how they can account for it
are important.
Mentorship: The goal can be achieved by sponsoring the female and minorities actors and stage
managers through offering them professional advice through programmes such as mentorship.
Collaboration: By collaborating other organizations and firms in the fight against discriminations
and prejudice in the society.
Data Collection: To understand where changes could be made and to help effect change through
gathering data on diversity in the theater industry.

Problem 11
Part A: Factor Markets
Venus is operating in two main factor markets:
Labor Market: She is hiring a marketing graduate, a good example is the buying of labor
services.
Capital Market: She wishes to purchase or rent tennis ball machine and this in an act of
purchasing capital goods.
Part B: The cost of capital equipment and the rental per unit of equipment.
Price of Capital Equipment: The price of the tennis ball machine is one thousand dollars. This is
the purchase price if she decided to go for it.
Rental Rate of Capital: This is the annual cost of leasing the machine and is popular referred to
as the rental rate of capital which is $500. This is the amount spent spending on using the
machine in a year but without having the ownership of that machine.
Therefore, Venus has two options:
Buy: Pay $1,000 and you have the machine for as long as you desire to use the machine.
Lease: It costs $500 per year to use that machine.
For example, if Venus wants to own the equipment, its budget, and business requirements will
determine how it will finance the equipment; the useful life of the machine and its residual value
will determine whether it will be more cost-effective to buy or lease the machine.

Chapter 19
Problem 6:
Analysis of Effect of Wage Hike on Wanda’s Marketplace
Part A: This eBook will explain the importance of employment level, Marginal Product of Labor
(MP), and Value of Marginal Product of Labor (VMP).
Where the packers earn $10 while the price of fish is still 50 cents, the VMP is lower. This is
because the expense of having another worker has become costlier than the income returned by
this worker.
Part B: Demand for Labor Curve
Likewise if VMP falls, it means that at the initial Wanda can only hire fewer workers according
to the wage rate. Thus is also her demand for labor curve shifts leftward.
Part C: Number of Students Employed
Since the rate of employment decreases Wanda will take students and employ them less rarely.

Problem 7:
Goal of Equity
Equity is expected to promote fairness and equality of treatment and opportunity for all actors
and stage managers no matter their gender or race. They are expect to fight discrimination and
Diversity in the live theater market.

Problem 8:
Why Equity is Seeking Greater Diversity
Equity seeks greater diversity for several reasons:
Equity: It has maintained order and equality to the extent that all those who act, perform and
coordinate the stage must receive equal treatment.
Representation: To eliminate certain stereotyped models in the theater that does not represent the
composition of society that is the reason why more diversed people should be involved in the
theater performances.
Talent: To be able to tap diverse talent so they can produce better outputs.
Cultural Relevance: To put up ethnic and other more socially conscious performances.

Problem 11:
The Factor Markets of Venus’ Tennis School
Venus is operating in two main factor markets:
Labor Market: She is hiring a marketing graduate, this is a case of buying labor service.
Capital Market: She needs to buy a tennis ball machine for which she has to make capital goods
an option they wish to acquire or lease.
Price of Capital Equipment and Rental Rate:
Price of Capital Equipment: The cost of the tennis ball machine if bought is $ 1000.
Rental Rate of Capital: The cost of leasing the machine is $500 per year.

Problem 12:
Marginal Product and Value of Marginal Product
Marginal Product of the Fourth Worker:
Therefore to find the marginal product of the fourth worker we need to take away the total
product from the third worker plus the total product of the four workers hired.
Total product with 4 workers = 43 milk shakes
Total product with 3 workers = 33 milk shakes
The MPC of the fourth worker = Total output at 4 workers – Total output at 3 workers = 43-33 =
10 milk shakes
Value of Marginal Product of the Fourth Worker:
The value of marginal product is the marginal product itself but multiplied by the price of the
good.
Price of a milk shake = $4
The value of marginal product = value of additional product = 10 * 4 dollars = 40 dollars.
Problem 13:
Evaluations on the Aspect of Optimal Output and Profit
To enhance on its profit, Kaiser’s will employ workers right from where the Marginal Product of
Labour (MPL) reduces with regard to the wages rate.
Wage rate = $40
Kaiser’s will hire workers until MRT = $40.
Analyzing the data the author identified, it can hardly be reached argumented that the marginal
product of the fifth worker is over $40 (while the total product rises 8 milk shakes).
Therefore, Kaiser’s will ensure that it hires 4 workers to ensure the company’s maximum
profitability.
Kaiser’s will sell as many as forty three milk shakes in a day.