(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $2 and the market wage rate is $20 per hour, the profit-maximizing quantity of labor is __ workers.
A)two
B)four
C)six
D)eight

Question

(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $2 and the market wage rate is $20 per hour, the profit-maximizing quantity of labor is __ workers.
A)two 
B)four 
C)six 
D)eight

Quizplus · Accepted Answer

From the graph, we can see that the profit-maximizing quantity of labor is where the value of the marginal product of labor (VMPL) equals the market wage rate. At $2 price of a power cord and $20 market wage rate, VMPL equals $2. Therefore, the profit-maximizing quantity of labor is where the VMPL curve intersects the horizontal line at $2, which occurs at 6 workers.