-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate is $24 per worker, what quantity of labour will maximise profits?
A) 2 workers
B) 5 workers
C) 4 workers
D) 1 worker

Question

-The above table has the total product schedule for Joe's Barber Shop. Joe charges $6 per haircut. If the wage rate is $24 per worker, what quantity of labour will maximise profits?
A) 2 workers 
B) 5 workers 
C) 4 workers 
D) 1 worker

Quizplus · Accepted Answer

To maximize profits, Joe should hire workers up to the point where the marginal revenue product (MRP) of labor equals the wage rate. Without the table, we can't calculate the exact MRP, but typically, the optimal quantity of labor is where additional output (from hiring an extra worker) multiplied by the price per unit (in this case, $6 per haircut) equals the cost of hiring the worker ($24). This is a general principle in economics for profit maximization.

-The Above Table Has the Total Product Schedule for Joe's