Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley's production schedule for strawberries is given in the following table: Labor Output (Pounds of strawberries) (Number of workers) 0 0 1 16 2 30 3 42 4 52 5 60 300 270
Suppose that the market wage for strawberry pickers is $200 per worker per day, and the price of strawberries is $15 per pound.
On the following graph, use the blue points (circle symbol) to plot Live Happley’s labor demand curve when the output price is $15 per pound.
Note: Remember to plot each point between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product of for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points.
Demand P = $15 240 210 180 Demand P = $13 WAGE (Dollars per worker) 150 120 90 60 30 0 0 1 5 5 2 3 LABOR (Number of workers) At the given wage and price level, Live Happley should hire ___
Suppose that the price of strawberries decreases to $13 per pound, but the wage rate remains at $200. On the previous graph, use the purple points (diamond symbol) to plot Live Happley's labor demand curve when the output price is $13 per pound. Now Live Happley should hire ____ when the output price is $13 per pound. Assuming that all strawberry-producing firms have similar production schedules, a decrease in the price of strawberries will cause the _____ strawberry pickers to _____ Suppose that wages decrease to $150 due to a decreased demand for workers in this market. Assuming that the price of strawberries remains at $13 per pound, Live Happley will now hire _____
