Gino's Pizza shop hires workers in a competitive market to make pizza. The ingredients required to make each pizza cost $5. Daily output at Gino's Pizza varies with the number of workers hired, as shown in the table:
$$\begin{array} { | c | c | }
\hline \text { Number di warkers } & \text { Pizfas/day } \
\hline 0 & 0 \
\hline 1 & 16 \
\hline 2 & 36 \
\hline 3 & 54 \
\hline 4 & 70 \
\hline 5 & 84 \
\hline 6 & 96 \
\hline
\end{array}$$
If the pizzas sell for $10 each, and the competitive market wage is $75 per day, Gino will hire ________ workers and produce ________ pizzas per day.

Question

Gino's Pizza shop hires workers in a competitive market to make pizza. The ingredients required to make each pizza cost $5. Daily output at Gino's Pizza varies with the number of workers hired, as shown in the table:  
$$\begin{array} { | c | c | } 
\hline \text { Number di warkers } & \text { Pizfas/day } \
\hline 0 & 0 \
\hline 1 & 16 \
\hline 2 & 36 \
\hline 3 & 54 \
\hline 4 & 70 \
\hline 5 & 84 \
\hline 6 & 96 \
\hline
\end{array}$$  
If the pizzas sell for $10 each, and the competitive market wage is $75 per day, Gino will hire ________ workers and produce ________ pizzas per day.

Quizplus · Accepted Answer

To determine the optimal number of workers to hire, we calculate the marginal product of labor (MPL) and the marginal revenue product (MRP) for each additional worker. The MPL is the additional output produced by an additional worker, and the MRP is the additional revenue generated by selling the additional output. The MRP is calculated as MPL times the price of a pizza ($10). Gino should continue hiring workers as long as the MRP is greater than or equal to the wage ($75). - For the 1st worker: MPL = 16 pizzas, MRP = 16 * $10 = $160- For the 2nd worker: MPL = 20 pizzas (36 - 16), MRP = 20 * $10 = $200- For the 3rd worker: MPL = 18 pizzas (54 - 36), MRP = 18 * $10 = $180- For the 4th worker: MPL = 16 pizzas (70 - 54), MRP = 16 * $10 = $160- For the 5th worker: MPL = 14 pizzas (84 - 70), MRP = 14 * $10 = $140- For the 6th worker: MPL = 12 pizzas (96 - 84), MRP = 12 * $10 = $120The MRP equals the wage for the 4th worker ($160 = $75 wage), but hiring the 5th worker would result in an MRP ($140) that is less than the wage. Therefore, Gino will hire 4 workers and produce 70 pizzas per day.

Gino's Pizza Shop Hires Workers in a Competitive Market to Make