Table 11.6
$$\begin{array} { | c | c | c | c | }
\hline \text { Units of Labor } & \text { Total Product } & \text { Marginal Product } & \begin{array} { c }
\text { Price of } \
\text { Watch } ( \$ )
\end{array} \
\hline 1 & 10 & 10 & 6 \
\hline 2 & 19 & 9 & 6 \
\hline 3 & 22 & 3 & 6 \
\hline 4 & 24 & 2 & 6 \
\hline 5 & 25 & 1 & 6 \
\hline
\end{array}$$
-Refer to Table 11.6 for the data of a firm that produces watches.If the firm's marginal resource cost of labor is constant at $18 per unit of labor,at the profit-maximizing level of output,the firm will hire _____ of labor.
A)one unit
B)two units
C)three units
D)four units
E)five units

Question

Table 11.6
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Units of Labor } & \text { Total Product } & \text { Marginal Product } & \begin{array} { c } 
\text { Price of } \
\text { Watch } ( \$ )
\end{array} \
\hline 1 & 10 & 10 & 6 \
\hline 2 & 19 & 9 & 6 \
\hline 3 & 22 & 3 & 6 \
\hline 4 & 24 & 2 & 6 \
\hline 5 & 25 & 1 & 6 \
\hline
\end{array}$$
-Refer to Table 11.6 for the data of a firm that produces watches.If the firm's marginal resource cost of labor is constant at $18 per unit of labor,at the profit-maximizing level of output,the firm will hire _____ of labor.
A)one unit
B)two units
C)three units
D)four units
E)five units

Quizplus · Accepted Answer

The profit-maximizing level of output is where marginal revenue equals marginal cost. In this case, the marginal revenue is equal to the price of the watch, which is $6. The marginal cost is equal to the marginal resource cost of labor, which is $18. Therefore, the profit-maximizing level of output is where the marginal product of labor is equal to $18. From the table, we can see that the marginal product of labor is equal to 3 when the firm hires 3 units of labor. Therefore, the firm will hire 3 units of labor at the profit-maximizing level of output.

Table 116 -Refer to Table 11