Asked by Miriam Chithra on Jun 08, 2024
Verified
A new pizza producing technology changes One Guy's marginal product of labor from 
If One Guy's can sell all the pizza it produces for $12 and pays each unit of labor $8, what happens to the level of employment due to this technology change?
Marginal Product
The additional output that is produced by using one more unit of a specific input, keeping other inputs constant.
Level of Employment
The total number of people currently employed in the economy, either full-time or part-time.
Pizza Producing Technology
The methods and equipment used in the production of pizzas, often incorporating advancements for efficiency and quality.
- Infer the optimal labor deployment by examining the marginal product of labor, wage rates, and marginal revenue impacts.
- Understand the role of technology in modifying the marginal product of labor.
Verified Answer
EF
Emmanuel FrimpongJun 11, 2024
Final Answer :
One Guy's old marginal revenue of the product of labor is 
For this original level of technology, One Guy's optimal employment usage was 
At the new level of technology, One Guy's marginal revenue of the product of labor becomes 
The new level of employment becomes: 
Thus, this increase in technology results in a quadrupling in the level of employment.
For this original level of technology, One Guy's optimal employment usage was At the new level of technology, One Guy's marginal revenue of the product of labor becomes The new level of employment becomes: Thus, this increase in technology results in a quadrupling in the level of employment.
Learning Objectives
- Infer the optimal labor deployment by examining the marginal product of labor, wage rates, and marginal revenue impacts.
- Understand the role of technology in modifying the marginal product of labor.