Use the table to answer the following question.
If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?
A) 3
B) 4
C) 5
D) 6

Question

Use the table to answer the following question.
 If the market wage rate is $150 per worker, how many workers should be employed if the firm wants to maximize profit?
A) 3 
B) 4 
C) 5 
D) 6

Quizplus · Accepted Answer

To maximize profit, the firm needs to hire workers up to the point where marginal revenue product (MRP) equals the market wage rate. At $150 wage rate, MRP for each worker can be found by looking at the last column of the table. MRP is highest at the 5th worker, which is $520. Hiring any additional workers would result in MRP being less than the wage rate, resulting in a loss of profit. Therefore, the firm should hire 5 workers to maximize profit.

Use the Table to Answer the Following Question