Figure: Marginal Product of Labor The firm in this figure will hire ______ worker(s) at a wage of $10 and 2 workers at a wage of _______.

Question

Figure: Marginal Product of Labor  The firm in this figure will hire ______ worker(s) at a wage of $10 and 2 workers at a wage of _______.

Quizplus · Accepted Answer

The firm will hire workers up to the point where their marginal product equals the wage. At a wage of $10, the marginal product of the first worker is 20 and the marginal product of the second worker is 15, so the firm will hire two workers. Hiring a third worker would result in a marginal product of only 5, which is less than the wage of $10, so it is not profitable for the firm to hire a third worker. Therefore, the best choice is to hire 2 workers at a wage of $10, which corresponds to choice B.

Figure: Marginal Product of Labor the Firm in This