A purely competitive firm faces the marginal product schedule shown in the table below. The price of the product is $25 and the wage rate is $300 per worker.
Calculate the marginal revenue product and complete the table. (Enter your responses as whole numbers.)
Workers
Marginal Product
(MP)
Marginal Revenue Product (MRP)
10
2424
$
11
2020
??
12
1616
??
13
1212
??
14
88
??
15
44
??
The firm should hire
A. 14 workers
B. 11 workers
C. 13 workers
D. 15 workers
A purely competitive firm faces the marginal product schedule shown in the table below. The price of the product is $25 and the wage rate is $300 per worker.
Calculate the marginal revenue product and complete the table. (Enter your responses as whole numbers.)
|
Workers |
Marginal Product (MP) |
Marginal Revenue Product (MRP) |
|
10 |
2424 |
$ |
|
11 |
2020 |
?? |
|
12 |
1616 |
?? |
|
13 |
1212 |
?? |
|
14 |
88 |
?? |
|
15 |
44 |
?? |
The firm should hire
A. 14 workers
B. 11 workers
C. 13 workers
D. 15 workers
Related textbook solutions
Related questions
Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).
|
Workers |
Total Product (TP) |
Average Product (AP) |
Marginal Product (MP) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
- |
- |
- |
|
1 |
10 |
Ā |
Ā |
Ā |
|
2 |
Ā |
15 |
Ā |
Ā |
|
3 |
Ā |
Ā |
40 |
Ā |
|
4 |
Ā |
35 |
Ā |
Ā |
|
5 |
190 |
Ā |
Ā |
Ā |
|
6 |
Ā |
Ā |
30 |
Ā |
|
7 |
240 |
Ā |
Ā |
Ā |
|
8 |
250 |
Ā |
Ā |
Ā |
|
9 |
Ā |
Ā |
5 |
Ā |
a) Fill in the missing numbers for the TP, AP, and MP columns (round to the nearest chair)
b) In one sentence explain what the AP of 4 workers being 35 tells us.
c) In one sentence explain what your answer for MP of the 4th worker tells us.
d) Given the fact that each chair produced in our factory can be sold at the market price of $10 per chair, fill in the MRP column (round to the nearest dollar).
e) In one sentence explain what your answer for MRP for the 4th worker tells us.
f) If the market wage for workers doing manufacturing work (such as chair production) is $180 per day, determine the amount of workers this firm should hire to maximize its profit.
Explain your answer using MRP.
Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).
|
Workers |
Total Product (TP) |
Average Product (AP) |
Marginal Product (MP) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
- |
- |
- |
|
1 |
10 |
Ā |
Ā |
Ā |
|
2 |
Ā |
15 |
Ā |
Ā |
|
3 |
Ā |
Ā |
40 |
Ā |
|
4 |
Ā |
35 |
Ā |
Ā |
|
5 |
190 |
Ā |
Ā |
Ā |
|
6 |
Ā |
Ā |
30 |
Ā |
|
7 |
240 |
Ā |
Ā |
Ā |
|
8 |
250 |
Ā |
Ā |
Ā |
|
9 |
Ā |
Ā |
5 |
Ā |
Ā
a) Fill in the missing numbers for the TP, AP and MP columns (round to the nearest chair)
b) In one sentence explain what the AP of 4 workers being 35 tells us.
c) In one sentence explain what your answer for MP of the 4th worker tells us.
d) Given the fact that each chair produced in our factory can be sold at the market price of $10 per chair, fill in the MRP column (round to the nearest dollar).
e) In one sentence explain what your answer for MRP for the 4th worker tells us.
f) If the market wage for workers doing manufacturing work (such as chair production) is $180 per day, determine the number of workers this firm should hire to maximize its profit.
Explain your answer using MRP.
Suppose a firm in a competitive industry faces an equilibrium product price of $2 per unit of output. Table A provides information on the output produced by various amounts of labor. Use this information to complete the remaining columns of Table A, and to fill in the labor demand schedule in Table B.
Table A: Production Schedule Units of Labor Total Product
| Units of Labor | Total Product | AP | MP | MRP |
| 0 | 0 | Ā | Ā | Ā |
| 1 | 13 | Ā | Ā | Ā |
| 2 | 25 | Ā | Ā | Ā |
| 3 | 34 | Ā | Ā | Ā |
| 4 | 42 | Ā | Ā | Ā |
| 5 | 46 | Ā | Ā | Ā |
| 6 | 48 | Ā | Ā | Ā |
(a) Complete Table A, where AP is the average product of labor, MP is the marginal product of labor, MRP is the marginal revenue product of labor.
(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market
| Wage Rate | Quantity Demanded |
| 24 | Ā |
| 16 | Ā |
| 8 | Ā |
(c) Complete Table B, with the labor demand schedule for this firm at different wage rates.
(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?
