Exhibit 13-1
-Refer to Exhibit 13-1. Suppose the firm is competitive and the output price is $10. Also suppose the prevailing wage is $200 per week. The firm will be able to hire ____ workers.

Question

Exhibit 13-1 
-Refer to Exhibit 13-1. Suppose the firm is competitive and the output price is $10. Also suppose the prevailing wage is $200 per week. The firm will be able to hire ____ workers.

Quizplus · Accepted Answer

To determine the number of workers the firm can hire, we need to calculate the marginal revenue product (MRP) of labor, which is the additional revenue generated by hiring one more worker. The firm will hire workers up to the point where the MRP equals the wage rate. If the output price is $10 and the wage is $200, the firm will hire workers until the MRP is $200. Assuming the MRP decreases with each additional worker, the firm will hire 3 workers if the MRP of the third worker is $200.

Exhibit 13-1 -Refer to Exhibit 13-1. Suppose the Firm Is Competitive and Is