Figure: Marginal Product of Labor The firm in this figure will hire ______ worker(s) at a wage of $10 and 2 workers at a wage of _______.

Question

Figure: Marginal Product of Labor  The firm in this figure will hire ______ worker(s) at a wage of $10 and 2 workers at a wage of _______.

Quizplus · Accepted Answer

The firm will hire workers up to the point where their marginal product of labor is equal to the wage rate. At a wage of $10, the marginal product of the first worker is 20, the second worker is 18, the third worker is 15, and the fourth worker is 10. Therefore, the firm will hire 2 workers at a wage rate of $10. At a wage rate of $15, the marginal product of the third worker is 15, which is equal to the wage rate, so the firm would not hire any additional workers beyond the 2 already hired. Therefore, the best choice is B, 3; $15.

Figure: Marginal Product of Labor the Firm in This