The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour.
FIGURE 13-1
-Refer to Figure 13-1.Suppose this firm has the marginal revenue product curve MRP1.At a wage rate of $12,the profit-maximizing firm will hire ________ units of labour.
A)100
B)120
C)140
D)160
E)180

Question

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour.
  FIGURE 13-1
-Refer to Figure 13-1.Suppose this firm has the marginal revenue product curve MRP1.At a wage rate of $12,the profit-maximizing firm will hire ________ units of labour.
A)100 
B)120 
C)140 
D)160 
E)180

Quizplus · Accepted Answer

At a wage rate of $12, the MRP curve intersects the wage rate line at 140 units of labor. This is the profit-maximizing point where the marginal revenue product is equal to the wage rate. Any less labor would result in forgone profits, and any additional labor would result in a negative profit. Therefore, the best choice is to hire 140 units of labor.

The Diagram Below Shows the MRP Curve for a Firm