Paper Pushers Inc. hires workers in a competitive labor market. Apart from labor, the company has no other variable inputs. The company's hourly output varies with the number of workers hired, as shown in the table.
$$\begin{array} { | c | c | }
\hline \text { Warkers } & \text { Puges/huur } \
\hline 0 & 0 \
\hline 1 & 40 \
\hline 2 & 75 \
\hline 3 & 105 \
\hline 4 & 125 \
\hline 5 & 140 \
\hline 6 & 150 \
\hline 7 & 155 \
\hline
\end{array}$$
If each page sells for $2 and the market wage is $15 per hour, then this firm will hire ________ workers per hour.

Question

Paper Pushers Inc. hires workers in a competitive labor market. Apart from labor, the company has no other variable inputs. The company's hourly output varies with the number of workers hired, as shown in the table.  
$$\begin{array} { | c | c | } 
\hline \text { Warkers } & \text { Puges/huur } \
\hline 0 & 0 \
\hline 1 & 40 \
\hline 2 & 75 \
\hline 3 & 105 \
\hline 4 & 125 \
\hline 5 & 140 \
\hline 6 & 150 \
\hline 7 & 155 \
\hline
\end{array}$$  
If each page sells for $2 and the market wage is $15 per hour, then this firm will hire ________ workers per hour.

Quizplus · Accepted Answer

To determine the optimal number of workers to hire, we calculate the marginal product of labor (MPL) and then the marginal revenue product of labor (MRPL), which is MPL times the price of the output ($2 per page). The firm will hire workers up to the point where MRPL equals the wage rate ($15).- For the 1st worker: MPL = 40 pages, MRPL = 40 * $2 = $80- For the 2nd worker: MPL = 35 pages (75-40), MRPL = 35 * $2 = $70- For the 3rd worker: MPL = 30 pages (105-75), MRPL = 30 * $2 = $60- For the 4th worker: MPL = 20 pages (125-105), MRPL = 20 * $2 = $40- For the 5th worker: MPL = 15 pages (140-125), MRPL = 15 * $2 = $30- For the 6th worker: MPL = 10 pages (150-140), MRPL = 10 * $2 = $20- For the 7th worker: MPL = 5 pages (155-150), MRPL = 5 * $2 = $10The firm will continue to hire workers as long as the MRPL is greater than or equal to the wage rate. The MRPL of the 6th worker is $20, which is greater than the wage rate of $15, but the MRPL of the 7th worker drops to $10, which is below the wage rate. Therefore, the firm will hire 6 workers.

Paper Pushers Inc If Each Page Sells for $2 and the Market Wage