The above table has the marginal product schedule for a firm. If the firm is a perfect competitor and the price of the product is constant at $2 a unit, complete the table. If the wage rate is $8 an hour, how many workers does the firm hire?
What will be an ideal response?
Quantity of labor
(workers) Marginal product
(units per hour) Value of marginal product
(dollars)
1 10 20
2 8 16
3 6 12
4 4 8
If the wage rate is $8 an hour, the firm hires 4 workers because that is the quantity that sets the value of marginal product equal to the wage rate.
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An increase in the price of gasoline shifts the demand for tires to the
A. left, because gasoline and tires are substitutes. B. left, because gasoline and tires are normally used together. C. right, because gasoline and tires are substitutes. D. right, because gasoline and tires are normally used together.
Based on the production data for Pat's Pizza Parlor in the above table, which worker has the largest marginal product?
A) Worker 1 B) Worker 2 C) Worker 3 D) Worker 4
How are total and marginal utility related?
What will be an ideal response?
If crop dusting on your farm causes your neighbors to have sore throats, then crop dusting is creating
A) only explicit costs. B) opportunity costs. C) external costs. D) internal costs.