Table 18-7 Number of Workers Output Marginal Product of Labor Value of Marginal
ID: 1111183 • Letter: T
Question
Table 18-7
Number of
Workers
Output
Marginal Product
of Labor
Value of Marginal
Product of Labor
Wage
Marginal
Profit
0
0
--
--
$500
--
1
100
AA
$1,000
$500
$500
2
BB
80
$ 800
$500
CC
3
DD
60
EE
$500
$100
4
280
FF
$ 400
$500
GG
5
HH
20
II
$500
JJ
Refer to Table 18-7. To maximize its profit, the firm will hire workers as long as the value of the marginal product of labor equals or exceeds
Select one:
a. $400.
b. $200.
c. $100.
d. $500.
Number of
Workers
Output
Marginal Product
of Labor
Value of Marginal
Product of Labor
Wage
Marginal
Profit
0
0
--
--
$500
--
1
100
AA
$1,000
$500
$500
2
BB
80
$ 800
$500
CC
3
DD
60
EE
$500
$100
4
280
FF
$ 400
$500
GG
5
HH
20
II
$500
JJ
Explanation / Answer
The right answer is d. $500
Explanation: A competitive firm will hire up to the point at which the value of the marginal product of labor equals the wage. Here, the wage is $500. So, to maximize its profit, the firm will hire workers as long as the value of the marginal product of labor equals or exceeds $500.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.