Consider the following table:

$\begin{array} { | l | l | l | l | l | l | l | l | }
\hline \text { Employment } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \
\hline \text { Total Product } & 0 & 12 & 22 & 30 & 36 & 40 & 42 \
\hline \text { Product Price } ( \$ ) & 3 & 3 & 3 & 3 & 3 & 3 & 3 \
\hline
\end{array}$
-If the business is hiring workers under perfectly competitive conditions at a wage rate of $22,it will choose to employ:
A)1 worker
B)2 workers
C)3 workers
D)4 workers
E)5 workers

Question

Consider the following table:

$\begin{array} { | l | l | l | l | l | l | l | l | } 
\hline \text { Employment } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \
\hline \text { Total Product } & 0 & 12 & 22 & 30 & 36 & 40 & 42 \
\hline \text { Product Price } ( \$ ) & 3 & 3 & 3 & 3 & 3 & 3 & 3 \
\hline
\end{array}$
-If the business is hiring workers under perfectly competitive conditions at a wage rate of $22,it will choose to employ:
A)1 worker
B)2 workers
C)3 workers
D)4 workers
E)5 workers

Quizplus · Accepted Answer

The business will hire workers up to the point where the marginal revenue product (MRP) equals the wage rate. MRP is calculated as the change in total revenue from hiring an additional worker. Here, MRP for the 3rd worker is $24 (8 units x $3), which is the highest MRP greater than or equal to the wage rate of $22.

Consider the Following Table -If the Business Is Hiring Workers Under Perfectly Competitive Conditions