Use the table below to answer the following questions.
Table 17.2.1

-Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

Question

Use the table below to answer the following questions.
Table 17.2.1
 
-Refer to Table 17.2.1.If the firm can sell all the output it wants for the price of $5 a unit,what is the profit-maximizing number of workers if the wage rate is $30?

Quizplus · Accepted Answer

To determine the profit-maximizing number of workers, we need to compare the Marginal Revenue Product (MRP) with the wage rate (W). 
If MRP > W, then the firm should hire more workers to increase profits. If MRP < W, then the firm should hire fewer workers to decrease costs. 
Using the data in the table, we can calculate MRP for each level of employment:

*For 0 workers, MRP = 0
*For 1 worker, MRP = $5
*For 2 workers, MRP = $9
*For 3 workers, MRP = $12
*For 4 workers, MRP = $14
*For 5 workers, MRP = $15
*For 6 workers, MRP = $14
*For 7 workers, MRP = $12

So, when the wage rate is $30, the profit-maximizing number of workers is 5, because MRP ($15) > W ($30) and it is the highest value among all the possible choices. Therefore, the answer is (C) 5.

Use the Table Below to Answer the Following Questions