Table 18-7
The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. Assume that labor is the only input that varies for the firm.

$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c }
\text { Marginal Product of Labor } \
\text { (Boxes of envelopes per week) }
\end{array} & \begin{array} { c }
\text { Wage } \
\text { (Dollars per } \
\text { worker per week) }
\end{array} \
\hline 0 & & \
\hline 1 & 133 & 393 \
\hline 2 & 111 & 393 \
\hline 3 & 93 & 393 \
\hline 4 & 83 & 393 \
\hline 5 & 75 & 393 \
\hline
\end{array}$$
-Refer to Table 18-7. Suppose the firm sells each box of envelopes that it produces for $5. The firm would not be interested in hiring a fifth worker unless the wage fell from its current level of $393 to what level?
A)$386
B)$380
C)$376
D)$375

Question

Table 18-7
The table displays data for a small, competitive, profit-maximizing firm that produces and sells envelopes. Assume that labor is the only input that varies for the firm.
​
​
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c } 
\text { Marginal Product of Labor } \
\text { (Boxes of envelopes per week) }
\end{array} & \begin{array} { c } 
\text { Wage } \
\text { (Dollars per } \
\text { worker per week) }
\end{array} \
\hline 0 & & \
\hline 1 & 133 & 393 \
\hline 2 & 111 & 393 \
\hline 3 & 93 & 393 \
\hline 4 & 83 & 393 \
\hline 5 & 75 & 393 \
\hline
\end{array}$$ ​
-Refer to Table 18-7. Suppose the firm sells each box of envelopes that it produces for $5. The firm would not be interested in hiring a fifth worker unless the wage fell from its current level of $393 to what level?
A)$386
B)$380
C)$376
D)$375

Quizplus · Accepted Answer

The firm would not be interested in hiring a fifth worker unless the wage fell to a level where the cost of hiring the worker is equal to or less than the revenue generated by that worker. The marginal product of the fifth worker is 75 boxes of envelopes per week. At a selling price of $5 per box, the revenue generated by the fifth worker would be 75 boxes * $5/box = $375. Therefore, the firm would not be interested in hiring a fifth worker unless the wage fell to $375 or below, making option D correct.

Table 18-7 the Table Displays Data for a Small, Competitive

Table 18-7
the Table Displays Data for a Small, Competitive