-City-Mart is the only employer of sales clerks in Panburg. In the figure above S is the labor supply curve faced by City-Mart, VMP is City-Mart's value of marginal product curve, and MCL is its marginal cost of labor curve. City-Mart maximizes its profit if it hires ________ hours of labor and pays ________ per hour.

Question

Quizplus · Accepted Answer

City-Mart maximizes profit where the marginal cost of labor (MCL) equals the value of marginal product (VMP). This occurs at 60 hours of labor. The wage paid is determined by the labor supply curve (S) at this quantity, which is $6 per hour.

-City-Mart Is the Only Employer of Sales Clerks in Panburg