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I am the inventor of a new generator that converts human push ups into safe and clean electrical energy. The “Machine” is the 4 x 7 rectangle

We will combine knowledge from past units like fixed and variable costs, total revenue, total cost, and profit, with new knowledge like marginal product of labor, marginal revenue product and marginal factor costs.

The Push-Up Machine

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SOME INFO

The Fixed Cost of running the machine is $20 regardless of if we hire 0 or 10 workers. Let’s fill this in.

Each push up generates $1 worth of energy or $1 of Marginal Revenue. We will use this info in a bit once we figure out how many units of energy we produced in total AND per worker (Marginal Product of Labor)

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Supply and demand in the labor market has resulted in a equilibrium wage of $5 (MRC = $5)
Let’s fill this in!!!
MRC = The additional cost of an additional resource (worker)
In perfectly competitive labor markets the MRC equals the wage set by the market and is constant.
Ex: The MRC of an unskilled worker is $5.00
The supply curve for the firm is perfectly elastic at $5…how much will you work for?

LET’S LOOK AT A PICTURE FIRST

*after filling out the grid, the graph will make sense

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S_L

D_L

Wage

Industry

Firm

Q_E

W_E

Q_e

D_L=MRP

S_L=MRC

Side-by-side graph showing Market and Firm

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Assuming identical skills, hire the first worker (do push ups in a 4ft x 7ft box).
Let’s start hiring workers (Each worker should make sound effects)
Ultimate objective is simple… how many workers should we hire?

*each worker needs a classmate to record the # of push-ups done in 30 seconds on a sticky note

A “wage” will be earned for each person who goes into the machine

AND to each person who records push-ups on a sticky note and hands it to me

AND for a desk recorder for the smart board

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complete simulation

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S_L

D_L

Wage

Industry

Firm

Q_E

W_E

Q_e

D_L=MRP

S_L=MRC

Side-by-side graph showing Market and Firm

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https://www.youtube.com/watch?v=kQc2YAbyI-k&list=PL50F9C4FD0BE8FE28&index=5

If you get what Mr. Clifford is about to show you, you are right where we want you!

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Wage

Q_e

D_L=MRP

S_L=MRC

Perfect Competition Product Market vs. Resource Market

Price

D=MR

S=MC

Q_e

Product Market

Firm Producing Electricity

Resource Market

Firm Hiring push-up workers

ACDC Leadership 2019

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https://www.youtube.com/watch?v=v_D7IxkjWWg&list=PL50F9C4FD0BE8FE28&index=6

If you get what Mr. Clifford does hear with the orange industry, you are right where we want you to be!

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Continue to hire until…

MRP = MRC

How do you know how many resources (workers) to employ?