Zowie! Surfboards has the following production function.
If surfboards sell for $30 and the nominal wage rate is $200,how many workers should the firm employ?
A)2
B)3
C)4

Question

Zowie! Surfboards has the following production function. 
If surfboards sell for $30 and the nominal wage rate is $200,how many workers should the firm employ?
A)2 
B)3 
C)4

Quizplus · Accepted Answer

To determine the optimal number of workers, we need to find the level of output where the marginal product of labor equals the wage rate. Looking at the graph, we can see that the marginal product of labor is equal to the wage rate where 4 workers are employed. At this level of output, each additional worker hired would add less to the total output than the cost of the additional worker's wage. Therefore, the optimal number of workers for this production function is 4.

Zowie! Surfboards Has the Following Production Function