Answer the question on the basis of the information given in the following table: $\begin{array}{c}
\begin{array}{c}
\
Employment\
\hline
0\
1 \
2 \
3 \
4 \
5 \
6
\end{array}
\begin{array}{c}
Total\
Product\
\hline
0\
12\
22\
30\
36\
40\
42\
\end{array}
\begin{array}{c}
\text { Product }\
\text { Price } \
\hline \$ 3 \
3 \
3 \
3 \
3 \
3 \
3
\end{array}
\end{array}$ Refer to the given data.If the firm is hiring workers under purely competitive conditions at a wage rate of $22,it will employ:
A) 1 worker.
B) 2 workers.
C) 3 workers.
D) 4 workers.

Question

Quizplus · Accepted Answer

Under purely competitive conditions, the firm will hire workers up to the point where the marginal product of labor equals the wage rate.

From the table:

When 3 workers are hired, the total product is 30 and the marginal product is 6. Therefore, the average product is 10.

When 4 workers are hired, the total product is 36 and the marginal product is 6. Therefore, the average product is 9.

Thus, the maximum level of output (and profits) is achieved at the point where 3 workers are hired.

Answer the Question on the Basis of the Information Given