Kaye Angelic I.

Gutierrez // BSBA 101 – A

Final Examination // January 26, 2021

1.) Described how firms make decisions to maximize production and labor demand.

Based on what I have read learned on the handouts given is that for a firm to make a decision to maximize
their production and labor demand they should analyze the demand labor through these assumptions (for
example, strawberry market):

a.) Firstly, the competitive business is expected to be a pricing agent like several other firms selling
strawberries and recruiting strawberries pickers, the price for strawberries and salaries for
strawberries pickers is not influenced by a single organization. The business takes the rates and wages
according to the demand. It just determines how many strawberries it can offer and how many people
it can recruit.
b.) Second, the company is considered to be a profitable company. Therefore, the company does not
explicitly concern itself with the amount of staff or strawberries it has. It just cares about gains, which
is the gross profits from strawberries sales minus total production costs. The business supply of
strawberries and labor demand is focused on its primary objective of optimizing benefit.
c.) The business needs to examine how its workers' scale impacts the production quality. The
production function explains how many inputs are used in processing and how much output is
processed.
d.) A profit-maximizing business does not concern itself with generating and distributing production,
but with the profits it can generate. As a result, the organization considers how much benefit per job
can earn before determining how many employees will employ. Since benefit is total benefit minus
payroll expense, a worker contribution to income minus the salary is profit from the extra employee.

Conclusion: Companies recruit workers for manufacturing. The amount of work required by a
corporation depends on the degree of production it wishes to achieve. Around the same time, the
judgment about how much to manufacture depends on the manufacturing rate, including labor costs.

2.) Explained the worker’s decisions and market forces that affect labor supply.

Based on what I have learned on the handouts given, there are many factors that affect labor supply and
here are some of the following:

a.) Changes in tastes — certain companies choose certain ages, races or genders to be employed. How
many employees the organization would employ would be influenced such shifts in the economy,
including a huge number of retired jobs. The supply of labor can also have an effect. For example,
mostly in the Philippines, the main qualification for the work construction of buildings and more is to
be a man because they explain that it is a heavy work that a woman can’t handle even some can
actually do.
b.) Changing alternate opportunities — labor supply in every economy depends on the chances in other
labor markets. If salaries from apple collectors increase abruptly, some mango pickers can prefer to
move jobs.
c.) Immigration — another cause of labor changes are workers migrate from one area to another or
country to one country. The availability of jobs in these cities rises as workers migrate to bigger
cities. And in the hometowns of citizens the supply of tabor disappears.

Conclusion: Labor supplies are influenced by various variables, including pay increases, demographic
rates, income tax adjustment, benefits overhaul, the trade unions, state jobs laws, retirement age changes
and women's participation.

3.) Explained the rules in decision-making.

According to the online video discussion, there are many factors to consider in making a decision to
however prevent failure possibilities: (1) Define the problem; (2) Identify possible alternatives; (3)
Establish standards and a method of classification; (4) Assess options according to requirements; (5) and
then make a decision.

One of the rules in decision making is to use tools during imperfect information:

a.) The expected value – is the sum of the payoffs linked to every outcome of a scenario that is
weighted by the potential result.
b.) Expected Utility — declining usefulness will expel why citizens. Typically, take part in betting
small stakes but not when payout requires bigger sums. We assume that a raise in payment will
deliver the profit or happiness after a certain point.

Secondly, know what to do or an attitude toward risk situations:

a.) Risk-averse — the declining marginal value of means that the average person is not playing a fair
game in big stakes; people who choose any pay-off to an unspeakable one with the same
predicted value have a risk-averse mindset towards risky scenarios. They don't want to take
chances that are larger than the amount they might receive in terms of their well-being or
usefulness.
b.) Risk-neutral — there are people who make the best bet (those With an expected value Of zero).
The median use of income is constant for these people, meaning that the association between
overall usefulness and income will be a clear upward slope in a graph. Any people are not at risk
if the stakes are low.
c.) Risk-seeking — those who play a game even when it is zero or less than anticipated.