The list on the right shows how much corn each man adds to the out of corn a far
ID: 1215108 • Letter: T
Question
The list on the right shows how much corn each man adds to the out of corn a farm can produce using various different amounts of labor and one acre of land. This firm can sell the corn for $30 per bushel. They pay $10 for the one acre of land. The wage is $60 per worker.
[#L] [M.P.L]
1 20
2 50
3 10
4 5
5 2
6 1
1. if this firm hires 3 workers, it will have a TOTAL PRODUCT =
2. if this firm hires 3 workers, it will have TOTAL REVENUE =
3. How many workers should they hire to maximize profits ?
4. If this firm does hire the number of workers you answered for question (1), exactly how much profits will they make ?..... $....
5. if all the workers have the same level of skill, why does the 2nd worker have a LARGER Marginal product than the 1st worker?
Explanation / Answer
labor MP TP TFC TVC TR TC
1 20 20 10 60 600 70
2 50 100 10 120 3000 130
3 10 30 10 180 900 190
4 5 20 10 240 600 250
5 2 10 10 300 300 310
6 1 6 10 360 180 370
**********************************************************************************
1) TP = 150
2) TR= 4500
3) They should hire 4 workers because MR=MC
4) profit = TR-TC= 710
5) Because of increasing returns as 2 workers are more efficient than a single one
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.