Table 12.4 Table 12.4 lists data for the production of Apple iPods.Apple is assumed to be a price maker, so to increase its sales of iPods the firm must lower its price.MP L and MRP L refer to the marginal product of labour and the marginal revenue product of labour, respectively.
-Refer to Table 12.4.The price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods are
A)$140; 2
B)$160; 2
C)$140; 3
D)$180; 1

Question

Table 12.4  Table 12.4 lists data for the production of Apple iPods.Apple is assumed to be a price maker, so to increase its sales of iPods the firm must lower its price.MP L and MRP L refer to the marginal product of labour and the marginal revenue product of labour, respectively.
-Refer to Table 12.4.The price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods are
A)$140; 2 
B)$160; 2 
C)$140; 3 
D)$180; 1

Quizplus · Accepted Answer

To maximize profit, Apple should hire the number of workers at which the marginal revenue product of labor (MRPL) equals the wage rate (which is equal to the marginal cost of labor, given that the firm is a price maker). Looking at the table, we can see that when 2 workers are hired, MRPL is $320 and the wage rate is $160, so MRPL = wage rate. Therefore, B is the correct answer.

Table 124 Table 12