Refer to the following:
The table below shows a competitive firm's short-run production function. Labor is the firm's only variable input, and market price for the firm's product is $2 per unit.
$\begin{array}{ll} \text {Units of Labor }& \text {Units of Output }\
3 & 370 \
4 & 490 \
5 & 570 \
6 & 600 \
7 & 620
\end{array}$
-If market price for the firm's product increases to $5, how many units of labor will the firm employ at a wage rate of $200?

Question

Refer to the following:
The table below shows a competitive firm's short-run production function. Labor is the firm's only variable input, and market price for the firm's product is $2 per unit.
 $\begin{array}{ll} \text {Units of Labor }& \text {Units of Output }\
3 & 370 \
4 & 490 \
5 & 570 \
6 & 600 \
7 & 620
\end{array}$
-If market price for the firm's product increases to $5, how many units of labor will the firm employ at a wage rate of $200?

Quizplus · Accepted Answer

The firm will employ labor until the marginal revenue product (MRP) equals the wage rate. MRP is calculated as the change in total revenue from hiring an additional unit of labor. At a price of $5, the MRP for the 5th unit of labor is $400 (80 units of output * $5), which is greater than the wage rate of $200. The MRP for the 6th unit is $150 (30 units * $5), which is less than $200, so the firm will employ 5 units of labor.

Refer to the Following: the Table Below Shows a Competitive Units of Labor Units of Output 33704490557066007620\begin{array}{ll} \text {Units of Labor }& \text {Units of Output }\\3 & 370 \\4 & 490 \\5 & 570 \\6 & 600 \\7 & 620\end{array}Units of Labor 34567​Units of Output 370490570600620​

Refer to the Following:
the Table Below Shows a Competitive $\begin{array}{ll} \text {Units of Labor }& \text {Units of Output }\\3 & 370 \\4 & 490 \\5 & 570 \\6 & 600 \\7 & 620\end{array}$