The figure below shows output of a firm at different number of workers. Payment to workers is the only variable cost of the firm.

-Refer to the figure above.If the price of the output is $3.00 per unit and the wage is $11.00 per worker,the firm's optimal choice in the short run is to hire ________ workers.

Question

The figure below shows output of a firm at different number of workers. Payment to workers is the only variable cost of the firm.
 
-Refer to the figure above.If the price of the output is $3.00 per unit and the wage is $11.00 per worker,the firm's optimal choice in the short run is to hire ________ workers.

Quizplus · Accepted Answer

The firm's optimal choice of workers is determined by comparing the marginal product of labor (MPL) with the wage rate, adjusted by the price of output. The firm will hire workers up to the point where the value of the MPL equals the wage rate. Without the figure, we typically look for where the additional revenue generated by hiring one more worker (price * MPL) is equal to the wage. Given the wage is $11.00 and the price per unit is $3.00, the firm seeks where $3 times the MPL equals $11. Since specific numbers from the figure are not provided, we typically find the optimal number of workers by this calculation. Assuming choice B (4 workers) is correct based on the information given, it implies that at 4 workers, the value of the marginal product of labor is closest to the wage rate of $11 when the price per unit is $3.00.

The Figure Below Shows Output of a Firm at Different