Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}
\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\
\begin{array} { c c c c }
\text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \
\hline 0 & 0 & - & - \
1 & 20 & 20 & \$ 5 \
2 & 50 & 30 & 5 \
3 & 75 & 25 & 5 \
4 & 95 & 20 & 5 \
5 & 110 & 15 & 5
\end{array}
\end{array}$$
-Refer to Table 10.1. If the payment to labor per day is $100, this T-shirt manufacturer is maximizing profits if he will hire ________ employee(s).
A) one
B) two
C) four
D) five

Question

Refer to the data provided in Table 10.1 below to answer the following question(s).
Table 10.1 $$\begin{array}{l}
\text { Total Labor Units } \quad \text { Total Product } \quad \text { Marginal Product of Price per }\
\begin{array} { c c c c } 
\text { (employees) } & \text { (T-shirts per day) } & \text { Labor (per day) } & \text { T-shirt } \
\hline 0 & 0 & - & - \
1 & 20 & 20 & \$ 5 \
2 & 50 & 30 & 5 \
3 & 75 & 25 & 5 \
4 & 95 & 20 & 5 \
5 & 110 & 15 & 5
\end{array}
\end{array}$$
-Refer to Table 10.1. If the payment to labor per day is $100, this T-shirt manufacturer is maximizing profits if he will hire ________ employee(s).
A) one
B) two
C) four
D) five

Quizplus · Accepted Answer

The manufacturer maximizes profits when the marginal product of labor (MPL) times the price per T-shirt equals the wage rate. The wage rate is $100 per day. At four employees, the MPL is 20 T-shirts per day, and the price per T-shirt is $5, so the value of the marginal product is 20 * $5 = $100, which equals the wage rate.

Refer to the Data Provided in Table 10 -Refer to Table 10