The following table is a record ofthe data of a competitive firm on labour

| February 25, 2017

Question 1)

The following table is a record ofthe data of a competitive firm on

labour and output:


Suppose the product price is $5 and the market wage per unit of labour is



Reproduce the above table on your answer sheet and complete

the table.

b)How many unitsof labour should be employed to maximise profit?

Briefly explain your answer.


Suppose the employees of Starbucks in China are paid 8 yuan per hour

and a cup of coffee is priced at 8 yuan. If Starbucks is maximising its


a )

whatis the value of marginal product of labour (VMPL) per hour of

the last worker employed by Starbucks? Briefly explain your answer.


what is the employee’s marginal product per hour of the last worker

employed? Briefly explain your answer.

Question 3 (Topic Labour)

a) Why are coal miners in China paid higher than factory workers even though theyhave receivedmore or less the same level of education and training?

b)Why are workers with good looks paid higher in some jobs, but notin others?

c) A recent report released by the Census and Statistics Department

indicates that male workers in USA, on average, earn more

than female workers and the gap of wage differential is widening. Isthis evidence of sex discrimination? Justify your answer

d)There are, on average, 150 new migrants entering USA from

the mainland China every day. Use a diagramto explain how this affects the

equilibrium wage and quantity of labour in USA.

e)Substantial foreign capital has been flowing into mainland China

since the early 1980s. How has this affected the wages and workers

employed in China? Explain with a diagram

Question 4(Topic :Externalities and public goods)

a )

i Under the responsibility scheme proposed by the US government, households will be charged for solid waste disposal. Is this charge justifiable from an economics point of view? Explain your answer witha diagram

ii) Is it fair to charge all households a flat rate for waste disposal? Why or why not? (4 marks)


i Are common resources public goods? Why?

ii Are Oxford University television programmes broadcast on television public goods? Briefly explain

iii Professor Paul Romer of Standard University argues that market mechanism and private property rights are excellent ways to preserve common resources, but not so good at encouraging production of new ideas or inventions. Do you agree with Professor Romer? Why or why not?

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