-Refer to the above table. Suppose the price of the good sold is $3 and the marginal factor cost of labor is $300, how many units of labor will the firm hire?

Question

Quizplus · Accepted Answer

A firm will hire units of labor up to the point where the marginal revenue product (MRP) of labor equals the marginal factor cost (MFC) of labor. MRP is calculated as the marginal product (MP) of labor times the price of the good. Without the table, we assume the firm hires where MRP = MFC, and given the MFC is $300 and the price is $3, we look for a point where MP times price approximately equals $300.

-Refer to the Above Table