Table 17-2
Table 17-2 lists data for the production of Apple iPods.Apple is assumed to be a price maker,so to increase its sales of iPods the firm must lower its price.MPL and MRPL refer to the marginal product of labor and the marginal revenue product of labor,respectively.
-Refer to Table 17-2.What are the price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods?

Question

Table 17-2
  Table 17-2 lists data for the production of Apple iPods.Apple is assumed to be a price maker,so to increase its sales of iPods the firm must lower its price.MPL and MRPL refer to the marginal product of labor and the marginal revenue product of labor,respectively.
-Refer to Table 17-2.What are the price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods?

Quizplus · Accepted Answer

To find the combination of price and quantity of workers that result in the maximum profit, we need to look for the point where the marginal revenue product of labor (MRPL) equals the wage rate (price). In the table, we can see that at 2 workers, the MRPL is $160, which is equal to the wage rate. At this point, the total revenue from selling the output produced by 2 workers would be $640 (160 x 4), and the total cost of hiring 2 workers would be $320 (140 + 180), resulting in a profit of $320. Therefore, the best choice is B, with a price of $160 and a quantity of 2 workers, to maximize profit.

Table 17-2 Table 17-2 Lists Data for the Production of Production