Table 10-1 shows the output produced by a competitive firm by employing different numbers of workers at a fixed wage rate. Based on the table below, the firm will employ _____ workers to maximize its profitsTable 10-1

Question

Table 10-1 shows the output produced by a competitive firm by employing different numbers of workers at a fixed wage rate. Based on the table below, the firm will employ _____ workers to maximize its profitsTable 10-1​

Quizplus · Accepted Answer

The firm will maximize its profits by hiring workers up to the point where the value of the marginal product of labor equals the wage rate (i.e. where MPL = w). In this case, the value of the marginal product of labor is highest at 16 workers (where it is $240 per hour), and this is also where MPL = w ($15 per hour). Hiring any more workers after this point would result in a lower value of MPL and therefore lower profits.

Table 10-1 Shows the Output Produced by a Competitive Firm