Page 311, # 2. The Zippy Paper Company has no control over either the price of p
ID: 1201169 • Letter: P
Question
Page 311, # 2. The Zippy Paper Company has no control over either the price of paper or the wage it pays its workers. The following table show the relationship between the number of workers Zippy hires and total output:
Assuming the selling price is $10 per box, answer the following questions:
a. What is the marginal revenue product (MRP) of each worker?
b. How many workers will Zippy hire if the wage rate is $100 per day?
c. How many workers will Zippy hire if the wage rate is $75 per day?
d. Assume the wage rate is $75 per day and the price of a box of paper is $20. How many workers will Zippy hire?
You should start by duplicating the chart on your sheet. You will then need to find the Marginal Product. Multiplying the Marginal Product by the Price will give you the Marginal Revenue Product.
Labor Input
(workers per day)
Total Output
(boxes of paper per day)
Marginal
Product
Price
MP x P = MRP
Marginal
Revenue
Product
0
0
1
15
2
27
3
36
4
43
5
48
Labor Input
(workers per day)
Total Output
(boxes of paper per day)
Marginal
Product
Price
MP x P = MRP
Marginal
Revenue
Product
0
0
1
15
2
27
3
36
4
43
5
48
Explanation / Answer
when thewage rate is 100 the firm will hire 3 employees.
when the wage rate is 75 the firm will hire 4 employees.
when the wage rate is 75 and price is 20 the firm will hire 6 employees.
labour input total output marginal product price marginal revenue product 0 0 0 10 0 1 15 15 10 150 2 27 12 10 120 3 36 9 10 90 4 43 7 10 70 5 48 5 10 50Related Questions
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