Table 10-4
Table 10-4 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. MPL and MRPL refer to the marginal product of labour and the marginal revenue product of labour, respectively.
-Refer to Table 10-4.What are the price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods?
A) $140; 2
B) $160; 2
C) $140; 3
D) $180; 1

Question

Table 10-4
  Table 10-4 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. MPL and MRPL refer to the marginal product of labour and the marginal revenue product of labour, respectively.
-Refer to Table 10-4.What are the price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods?
A) $140; 2 
B) $160; 2 
C) $140; 3 
D) $180; 1

Quizplus · Accepted Answer

To determine the profit-maximizing quantity of workers, we need to look for the point where marginal revenue product (MRP) is equal to the marginal cost of labor (wage rate). From the table, we can see that when two workers are employed, MRP is $320 and when three workers are employed, MRP is $280. The wage rate is $80 per worker for all levels of employment. Therefore, the profit-maximizing quantity of workers is two because at this level, MRP is equal to the wage rate and the firm would earn the most profit. The price that Apple charges for its iPods is not given in the table, so we cannot use that information to determine the profit-maximizing price.

Table 10-4 Table 10-4 Lists Data for the Production of Production