The following table provides information about production at the XYZ-TV Company. $$\begin{array} { | c | c | c | c | }
\hline \text { Number of Workers } & \text { TVs Produced } & \text { Marginal Product } & \begin{array} { c }
\text { Value of Marginal } \
\text { Product }
\end{array} \
\hline 0 & 0 & \cdots & \cdots \
\hline 1 & 35 & 35 & \$ 35,000 \
\hline 2 & 68 & 33 & \$ 33,000 \
\hline 3 & 99 & 31 & \$ 31,000 \
\hline 4 & 128 & 29 & \$ 29,000 \
\hline 5 & 155 & 27 & \$ 27,000 \
\hline
\end{array}$$ How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $32,000?
A) 0
B) 1
C) 2
D) 3

Question

The following table provides information about production at the XYZ-TV Company. $$\begin{array} { | c | c | c | c | } 
\hline \text { Number of Workers } & \text { TVs Produced } & \text { Marginal Product } & \begin{array} { c } 
\text { Value of Marginal } \
\text { Product }
\end{array} \
\hline 0 & 0 & \cdots & \cdots \
\hline 1 & 35 & 35 & \$ 35,000 \
\hline 2 & 68 & 33 & \$ 33,000 \
\hline 3 & 99 & 31 & \$ 31,000 \
\hline 4 & 128 & 29 & \$ 29,000 \
\hline 5 & 155 & 27 & \$ 27,000 \
\hline
\end{array}$$ How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $32,000?
A) 0
B) 1
C) 2
D) 3

Quizplus · Accepted Answer

To determine the number of workers that the XYZ-TV Company will hire, we need to look at the value of marginal product (VMP) column because VMP represents the additional revenue that each worker generates. As the marginal product of labor (MPL) decreases, the VMP also decreases.
When the wage rate is $32,000, we can see that the VMP falls below $32,000 when the third worker is hired. Therefore, the company should only hire 2 workers to maximize profits.

The Following Table Provides Information About Production at the XYZ-TV