Table 14.1
$\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { labour }
\end{array} & \text { Output (units) } \
\hline 1 & 80 \
\hline 2 & 170 \
\hline 3 & 240 \
\hline 4 & 300 \
\hline 5 & 350 \
\hline 6 & 390 \
\hline 7 & 420 \
\hline
\end{array}$
-Refer to Table 14.1.Suppose the output price is $3.If the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate?

Question

Table 14.1
 $\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { labour }
\end{array} & \text { Output (units) } \
\hline 1 & 80 \
\hline 2 & 170 \
\hline 3 & 240 \
\hline 4 & 300 \
\hline 5 & 350 \
\hline 6 & 390 \
\hline 7 & 420 \
\hline
\end{array}$
-Refer to Table 14.1.Suppose the output price is $3.If the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate?

Quizplus · Accepted Answer

The firm is maximizing its profit by hiring six workers, so the marginal product of labor is equal to the wage rate. The marginal product of labor is the change in output divided by the change in labor. From the table, we can see that the marginal product of labor between 5 and 6 workers is 40 units. Therefore, the wage rate must be $120 (40 units * $3 per unit).

Table 141 -Refer to Table 14