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 quantity of labor and marginal revenue product of labor that will maximize the 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 quantity of labor and marginal revenue product of labor that will maximize the profit Apple would earn from selling iPods?

Quizplus · Accepted Answer

To maximize profit, Apple should hire labor up to the point where MRPL=MCL. From the given data, when Apple employs 2 workers, MRPL=$320 and MCL=$160, which means increasing the number of workers will lead to a decline in MRPL below MCL, resulting in a lower profit. Therefore, the optimal quantity of labor for Apple is 2, and the corresponding MRPL is $680 (based on the third column of data). Thus, the answer is C.

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