Table 10.1
-Refer to Table 10.1. If the price of output is $2 per unit and the wage rate is $60, ________ workers should be hired.

Question

Quizplus · Accepted Answer

To find the optimal number of workers to hire, we need to calculate the marginal product (MP) of labor for each worker and compare it to the wage rate (W). In this case, when 6 workers are hired, the MP of labor is highest and is equal to the wage rate ($60), indicating that the firm is hiring the right amount of labor to maximize profit. Any less than 6 workers would result in a lower output and any more than 6 workers would lead to diminishing returns and lower profits. Therefore, the best choice is B, six workers.

Table 10.1 -Refer to Table 10.1. If the Price of Output Is