Here is a schedule showing the amount of output of corn firm X can produce using

Question

Here is a schedule showing the amount of output of corn firm X can produce using one fixed acre of land and different numbers of workers. This firm can sell all the corn they want at a price of $10 per bushel. The land costs them $100. Use

# of workers       Marginal product of each worker
   1               50
   2               100
   3               60
   4               20
   5               10
   6               4  
   7               2

11) How much is the total product with 4 workers

12) if the wage is $40, how many workers should this firm hire to maximize profits?

13) If this firm hires the number of workers you answered for question 12, how much profits will they make

14) how much is TOTAL FIXED cost for this firm in the SHORT RUN ?

15a) how much is it in the long run

15b) why does worker 2 have a larger marginal product than worker 1 even though they have the same level of skill?

Explanation / Answer

11. Total product with 4 workers is: 230 bushel

12. If the wage is $40, this firm should hire 6 workers to maximize profits

13. If this firm hires 6 workers the profits will be $2100

14. TFC = $100

15a) can not be determined. because in long run plant size is not known.

15b) The working hours for worker 2 may be more.

No of workers MP of workers TP TFC($) TVC($) TC($) TR(P * TP) ($) Profit(TR - TC) ($) 1 50 50 100 40 140 500 360 2 100 150 100 80 180 1500 1320 3 60 210 100 120 220 2100 1880 4 20 230 100 160 260 2300 2040 5 10 240 100 200 300 2400 2100 6 4 244 100 240 340 2440 2100 7 2 246 100 280 380 2460 2080

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