Table 10-3
Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labour at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 10-3 shows the relationship between the quantity of labour it hires and the quantity of microwave ovens it produces.
-Refer to Table 10-3.What is Hotspur's profit-maximising quantity of labour?
A) 2 workers
B) 3 workers
C) 5 workers
D) 6 workers

Question

Table 10-3
  Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labour at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 10-3 shows the relationship between the quantity of labour it hires and the quantity of microwave ovens it produces.
-Refer to Table 10-3.What is Hotspur's profit-maximising quantity of labour?
A) 2 workers 
B) 3 workers 
C) 5 workers 
D) 6 workers

Quizplus · Accepted Answer

Hotspur's profit-maximising quantity of labour is 5 workers because at this point, the marginal revenue product of labour (MRPL) is equal to the wage rate.

Table 10-3 Hotspur Incorporated, a Manufacturer of Microwave Ovens, Is