Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3
-Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 per worker per day. If the firm wants to maximize its profits, it should
A) hire fewer workers
B) hire more workers.
C) make no adjustments as it is already employing the profit-maximizing number of workers.
D) shut down since it is incurring a loss.

Question

Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
-Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 per worker per day. If the firm wants to maximize its profits, it should
A) hire fewer workers 
B) hire more workers. 
C) make no adjustments as it is already employing the profit-maximizing number of workers. 
D) shut down since it is incurring a loss.

Quizplus · Accepted Answer

To determine the profit-maximizing number of workers, the firm should compare the marginal revenue product (MRP) of labor to the wage rate. If the MRP of the fourth worker is greater than $480, the firm should hire more workers to maximize profits.

Refer to the Data Provided in Table 10