Table 18-2

-Refer to Table 18-2.The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $8,how many workers would the firm employ if the weekly wage rate is $800?

Question

Table 18-2
 
-Refer to Table 18-2.The following table shows the number of calculators that can be assembled per week by various numbers of workers.If the price per calculator in a perfectly competitive product market is $8,how many workers would the firm employ if the weekly wage rate is $800?

Quizplus · Accepted Answer

To maximize profits, the firm should choose the level of production where the marginal revenue product of labor (MRP) equals the wage rate. In this case, if we multiply the number of calculators produced by the price per calculator ($8), we get the MRP. For example, if 2 workers are employed, 60 calculators can be produced per week, giving an MRP of $480. If 3 workers are employed, 85 calculators can be produced per week, giving an MRP of $680. Therefore, the firm should employ 3 workers because the MRP of the third worker is greater than the wage rate of $800.

Table 18-2 -Refer to Table 18-2.The Following Table Shows the Number of Shows