Table: Mr. B's Restaurant

The second column in this table shows the firm's ______. At a wage of $28 an hour, Mr. B should hire ______ cooks.

Question

Table: Mr. B's Restaurant

The second column in this table shows the firm's ______. At a wage of $28 an hour, Mr. B should hire ______ cooks.

Quizplus · Accepted Answer

The second column in the table shows the marginal product of labor, which is the additional output that is produced when one additional unit of labor is added. Therefore, Mr. B should hire workers up to the point where the marginal product of labor equals the wage rate. At a wage of $28 an hour, the marginal product of the third cook is 26, which is greater than the wage rate. However, the marginal product of the fourth cook is only 20, which is less than the wage rate. Therefore, Mr. B should hire three cooks.