EC questions

1. Graph a short-run production function, and the marginal

and average products of that function. Label the stages of the function. Make sure

your graph and stages show the correct relationships between MP, AP, and the stages.

2. A clothing store is considering implementing a job training program for temporary

workers during the holiday rush, in a perfectly competitive labor market:

MRP

Untrained $100/day

During training $20/day

Trained $150/day

Training lasts for 2 weeks (5 work days/week), and workers would remain employed

for 6 more weeks after training is over.

(a) Suppose that this training involves learning to use the cash register, properly

folding clothes, and basic customer service. Who would benet from this training,

the workers or the rm? Would that party choose to implement the training

program, or not? If it were implemented, what would worker pay be during each

period (before, during, and after training)?

(b) Now suppose the training involves learning the specic policies of the company

and more about their specic clothing lines. In this case, which party would

benet from the training? Would it be implemented? And what would worker

pay be during each period?