Q1. What are the advantages and disadvantages of austerity?
Q2. Leadbelly Co. sells pencils in a perfectly competitive product market and hires workers in a perfectly competitive labor market. Assume that the market wage rate for workers is $150 per day.
a. What rule should Leadbelly follow to hire the profit-maximizing amount of labor?
b. At the profit-maximizing level of output, the marginal product of the last worker hired is 30 boxes of pencils per day. Calculate the price of a box of pencils.