MGEB06H3 Lecture Notes - Lecture 2: Loanable Funds, Real Interest Rate, Real Wages
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5 Oct 2015
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Question 1
The following table is a record of the data of a competitive firm on labour and output:
Unit of labour | Total product | Marginal product of labour (MPL) | Value of marginal product of labour (VMPL) |
0 | 0 | ||
1 | 10 | ||
2 | 22 | ||
3 | 32 | ||
4 | 39 | ||
5 | 42 | ||
6 | 41 | ||
Suppose the product price is $5 and the market wage per unit of labour is $35.
a Reproduce the above table on your answer sheet and complete the table.
b How many units of labour should be employed to maximise profit? Briefly explain your answer.