The following figure depicts the labor markets of two different firms.

-Refer to the figure above.If firm B wants to hire 6 employees and pay a wage of $6,what is the market price of its output?

Question

The following figure depicts the labor markets of two different firms.
 
-Refer to the figure above.If firm B wants to hire 6 employees and pay a wage of $6,what is the market price of its output?

Quizplus · Accepted Answer

When firm B wants to hire 6 employees and pay a wage of $6, we can find the corresponding point on Firm B's labor market curve which is (6, $6). We then draw a horizontal line from this point to intersect with Firm B's production function curve. The point of intersection is the level of the output that firm B must produce in order to employ 6 workers at a wage of $6. We then find this output on the horizontal axis and read off the corresponding market price of the output which is $2. Therefore, the market price of output is $2 when firm B wants to hire 6 employees and pay a wage of $6.

The Following Figure Depicts the Labor Markets of Two Different