Use the information in the table below to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market.

-Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?
A) 4
B) 5
C) 6
D) 7

Question

Use the information in the table below to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market.
 
-Refer to Table 12-6. If the market wage rate is $25 per day, how many workers should the firm hire if it wants to maximize profits?
A) 4 
B) 5 
C) 6 
D) 7

Quizplus · Accepted Answer

To maximize profits, the firm should hire workers up to the point where the marginal revenue product (MRP) of labor equals the wage rate. If the MRP of the 6th worker is $25, the firm should hire 6 workers.

Use the Information in the Table Below to Answer the Following