refer to the following table that shows the short-run production relationship and the product demand schedule for a firm.

$\begin{array}{ccc}
\text { Labor } & \text { Output } & \text { Output Price } \
\hline
1 & 10 & \$ 20.00 \
2 & 15 & 19.00 \
3 & 19 & 18.00 \
4 & 22 & 17.00 \
5 & 24 & 16.00 \
6 & 25 & 15.00
\end{array}$
-How many workers will this firm hire if the wage is $10?
A)3
B)4
C)5
D)6

Question

refer to the following table that shows the short-run production relationship and the product demand schedule for a firm.

$\begin{array}{ccc}
\text { Labor } & \text { Output } & \text { Output Price } \
\hline
1 & 10 & \$ 20.00 \
2 & 15 & 19.00 \
3 & 19 & 18.00 \
4 & 22 & 17.00 \
5 & 24 & 16.00 \
6 & 25 & 15.00
\end{array}$
-How many workers will this firm hire if the wage is $10?
A)3
B)4
C)5
D)6

Quizplus · Accepted Answer

The firm will hire workers until the marginal revenue product (MRP) equals the wage. The MRP is calculated by multiplying the change in output by the output price. For the 5th worker, the MRP is (24-22) * $16 = $32, which is greater than the wage of $10. For the 6th worker, the MRP is (25-24) * $15 = $15, which is still greater than $10. Therefore, the firm will hire 5 workers.

Refer to the Following Table That Shows the Short-Run Production