-Refer to the above table. If the price of the product is $1.50, and the marginal factor cost of an additional unit of an input is $105, how many units of labor should be hired?

Question

Quizplus · Accepted Answer

To determine the optimal number of labor units to hire, calculate the marginal revenue product (MRP) of labor, which is the additional revenue generated by hiring one more unit of labor. The MRP is calculated by multiplying the marginal product of labor (MPL) by the price of the product. The firm should hire labor until the MRP equals the marginal factor cost (MFC). If the MRP at 13 units of labor equals $105, then 13 is the optimal number of units to hire.

-Refer to the Above Table