Suppose a competitive firm that is profit-maximizing pays a wage of $750 per week, and the price of its output is $15 per unit. Based on this information, one may surmise that the firm's marginal product is

Question

Quizplus · Accepted Answer

To determine the firm's marginal product, we need to use the profit-maximizing condition that the firm will hire workers until the marginal revenue product (MRP) equals the wage rate.

We can rearrange this condition to get MRP = wage rate / price of output.

In this case, the wage rate is $750 per week and the price of output is $15 per unit. So MRP = $750 / $15 = 50 units.

Therefore, the correct answer is (D) 50 units.

Suppose a Competitive Firm That Is Profit-Maximizing Pays a Wage