es cow\'s milk and sells it to a local store for $2.20 per gallon. Agricultu Map
ID: 1115511 • Letter: E
Question
es cow's milk and sells it to a local store for $2.20 per gallon. Agricultu Map Martin's workers in the area are paid a fixed wage rate of S125 per day. Use this information and the information i table below to answer the questions that follow. Assume that the milk farm is profit maximizing ical Milk Farm Workers QuantityWhat is the marginal product of labor (MPL) of milk per day (gallons) 0 100 for employing a third worker? Number 0 gallons 2 What is the value of the marginal pr labor (VMPL) for employing a sixth worker? oduct of 275 325 350 370 Number 6 How many employees should Martin's farm employ? Number employees How many employees should Martin's farm employ if the price he received per gallon of milk rose to $2.50? Number employeesExplanation / Answer
Q1
the marginal product of n labor=total product of n labor - the total product of n-1 labor
MP(3)=275-195=80 gallons
Q2
the marginal product of n labor=total product of n labor - the total product of n-1 labor
MP(3)=370-350=20
VMPL=MP*Price=20*2.2=44
Q3
The optimum employe will be wage=VMPL
VMPL(4)=MPL(4)*2.2=(325-275)*2.2=50*2.2
=110
and VMPL(3)=80*2.2=176
the firm will employe three workers
because the VMPL is above and nearest to wage.
Q4
VMPL(4)=50*2.5=125
now Martin can afford 4 workers
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