Table 17.3
-Refer to Table 17.3.If the market price of the product is $4 and the firm can hire as many workers as it wants at a wage of $40,the firm should hire ________ workers.

Question

Quizplus · Accepted Answer

To determine the optimal level of labor, we need to find the level of labor where marginal revenue product (MRP) is equal to the wage rate. From the table, we can see that at 4 workers, the MRP is $160, which is equal to the wage rate of $40. At any other level of labor, either the MRP is less than $40 or greater than $40, indicating that the firm would either be overpaying or underpaying its workers. Thus, the firm should hire 4 workers to maximize profits.

Table 17.3 -Refer to Table 17.3.If the Market Price of the Product