Use the table below to answer the following questions.
Table 18.2.1

-Refer to Table 18.2.1. 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 18.2.1
 
-Refer to Table 18.2.1. 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 maximize profit, the firm should hire workers up to the point where the marginal revenue product (MRP) of labor equals the wage rate. If the price per unit is $5, the MRP is the additional output from each worker multiplied by $5. The firm should hire workers until the MRP equals $30, the wage rate. Based on the table, this occurs when hiring 5 workers.

Use the Table Below to Answer the Following Questions