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18 marksThe Demand for and Supply of Factors

CAPE Economics Unit 1 · 2009 · Paper 2 · Question 5(a)(ii)

Section III covers factor markets and poverty.

On the answer sheet provided, complete the table assuming that the price of the product is 100 per unit and the wage rate is 200.

This question uses a figure or table from the paper — you'll see it when you practise.

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Other parts of this question

  1. 5(a)(i)a)State the formula for computing the Marginal Physical Product of Labour (MPP).[2 marks]
  2. 5(a)(i)b)State the formula for computing the Average Physical Product of Labour (APP).[2 marks]
  3. 5(a)(i)c)State the formula for computing the Value of Marginal Product (VMP).[2 marks]
  4. 5(b)(i)Plot the labour demand curve and the wage rate on the same diagram.[15 marks]
  5. 5(b)(ii)Determine the number of units of labour that the firm will employ and explain why.[7 marks]
  6. 5(b)(iii)If the workers become unionized, and their trade union successfully bargains for a wage rate of $400 (a 100% increase), how many workers will now be unemployed?[4 marks]

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