The Zippy Paper Company has no control over either the price of paper or the wage it pays its workers. The following table shows 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
The Zippy Paper Company has no control over either the price of paper or the wage it pays its workers. The following table shows 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 |
|||
Related textbook solutions
Related questions
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
coal output (in tons per day).
|
Number of Workers |
Total Output of Coal |
|
0 |
0 |
|
1 |
25 |
|
2 |
44 |
|
3 |
60 |
|
4 |
70 |
|
5 |
75 |
Questions:
a) How many workers would the coal company want to hire if the price of coal were competitively priced at $5 per ton and the wage rate were $40 per day?
and
b) what is the marginal physical product of the second worker?
| Number workers (daily) | Total Revenue ($) |
| 3 | 1,350 |
| 4 | 1,580 |
| 5 | 1,760 |
| 6 | 1,885 |
| 7 | 1,965 |
Refer to the table above.
a. What is the marginal product of labor for the fifth worker?
b. If the market wage for each worker is $100 per day, how many workers
will the company hire?
c. If the market wage for each worker rose from $100 to $130 per day, how
many workers would the firm hire?
d. If there is competition from new immigrants that lowers the market wage
for each worker from $100 to $75 per day, how many workers would the
firm hire?
