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3 marksThe Demand for and Supply of Factors

CAPE Economics Unit 1 · 2014 · Paper 2 · Question 5(b)(ii)

Blue Corp manufactures semiconductor chips in a perfectly competitive market using a least-cost combination of inputs. Marginal product of labour is 28 chips per worker hour at a wage rate of $14/hour; marginal product of machine is 60 chips per machine hour.

Use the least-cost rule to calculate the hourly rental price of a machine.

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Other parts of this question

  1. 5(a)(i)Explain what is meant by the statement 'The demand for all productive resources is a derived demand.'[2 marks]
  2. 5(a)(ii) a)Outline TWO factors that influence the demand for labour.[4 marks]
  3. 5(a)(ii) b)Outline TWO factors that influence the supply of labour.[4 marks]
  4. 5(b)(i)State the 'least-cost rule'.[2 marks]
  5. 5(b)(iii)Assuming the popularity of Blue Corp's semiconductor chips falls, explain with the aid of a well-labelled diagram the effect of this decrease on the marginal…[6 marks]
  6. 5(c)Outline TWO factors that can account for workers in certain countries being more productive than workers in other countries.[4 marks]

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