Use the table to answer the following question.
If the market wage rate is $130 per week, how many workers should be employed if the firm wants to maximize profit?
A)3
B)4
C)5
D)6 or more

Question

Use the table to answer the following question. 
If the market wage rate is $130 per week, how many workers should be employed if the firm wants to maximize profit?
A)3 
B)4 
C)5 
D)6 or more

Quizplus · Accepted Answer

From the table, we can see that the marginal revenue product (MRP) of each worker decreases as more workers are hired. At 5 workers, the MRP is $130, which is equal to the market wage rate. Therefore, the firm should employ 5 workers to maximize profit. If the firm hires fewer workers, they would miss out on potential revenue, and if they hire more workers, the cost of wages would outweigh the marginal revenue generated by each additional worker.

Use the Table to Answer the Following Question