The following figure gives the total product of labor at different levels of labor use per day.The market price of the product is $10 per unit and the market wage rate is $8 per day.

$$\begin{array} { c | c }
\begin{array} { l }
\text { Labor } \
\text { Employed }
\end{array} & \begin{array} { l }
\text { Total Product } \
\text { (in units) }
\end{array} \
\hline 4 & 17 \
5 & 20 \
6 & 25 \
7 & 28 \
8 & 30
\end{array}$$
-Refer to Table .The marginal product of labor is the highest when the firm hires _____ workers.

Question

The following figure gives the total product of labor at different levels of labor use per day.The market price of the product is $10 per unit and the market wage rate is $8 per day.

$$\begin{array} { c | c } 
\begin{array} { l } 
\text { Labor } \
\text { Employed }
\end{array} & \begin{array} { l } 
\text { Total Product } \
\text { (in units) }
\end{array} \
\hline 4 & 17 \
5 & 20 \
6 & 25 \
7 & 28 \
8 & 30
\end{array}$$
-Refer to Table .The marginal product of labor is the highest when the firm hires _____ workers.

Quizplus · Accepted Answer

Marginal product of labor is the additional output produced by one additional unit of labor. It can be found by taking the difference between total product of labor for two consecutive levels of labor employed. Thus, the marginal product of labor is:
- For the fourth worker, MP = 17 - 0 = 17
- For the fifth worker, MP = 20 - 17 = 3
- For the sixth worker, MP = 25 - 20 = 5
- For the seventh worker, MP = 28 - 25 = 3
- For the eighth worker, MP = 30 - 28 = 2

Therefore, the highest marginal product of labor is when the firm hires 6 workers. This is when the firm gets the most additional output per additional unit of labor, so they should hire this many workers to maximize profits.

The Following Figure Gives the Total Product of Labor at Different