Table 18-6

-Refer to Table 18-6.Suppose that the firm pays its workers $55 per day.Each unit of output sells for $12.How many days of labor should the firm hire?

Question

Table 18-6
 
-Refer to Table 18-6.Suppose that the firm pays its workers $55 per day.Each unit of output sells for $12.How many days of labor should the firm hire?

Quizplus · Accepted Answer

The firm should hire workers up to the point where the marginal revenue product (MRP) of labor equals the wage rate. If each unit sells for $12, the firm should hire labor until the additional revenue from the last unit produced by the last worker hired equals $55. This typically occurs at the point where the marginal product of labor times the price of the output equals the wage rate.

Table 18-6 -Refer to Table 18-6.Suppose That the Firm Pays Its Workers