(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 $4 and the market wage rate is $80 per hour, the profit-maximizing quantity of labor is __ worker(s).
A)one
B)three
C)five
D)seven

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 $4 and the market wage rate is $80 per hour, the profit-maximizing quantity of labor is __ worker(s).
A)one 
B)three 
C)five 
D)seven

Quizplus · Accepted Answer

The profit-maximizing quantity of labor is where the value of the marginal product of labor (VMPL) equals the wage rate. At a wage rate of $80, the VMPL is highest at 5 workers and then starts to decrease. Therefore, hiring 5 workers would be the optimal choice to maximize profits.