Suppose That Labour Is the Only Input Used by a Perfectly

question 172

Essay

Suppose that labour is the only input used by a perfectly competitive firm.The firm can hire workers for $160 per day.Each unit sells for $30.The firm's production function is as follows:
$\begin{array}{ll}\text { Labour } & \text { Output } \\\hline 0 & 0 \\1 & 8 \\2 & 15 \\3 & 21 \\4 & 26 \\5 & 30 \\6 & 33\end{array}$
Calculate the value of the marginal product of labour at each input level, then determine how much labour the firm will employ.

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Definitions:

External Costs

Costs incurred by third parties who are not involved in a transaction, often leading to market failure if not properly accounted for.

Perfect Information

A market condition where all participants have complete and identical information about the product, including its price and quality.

Minimum Imposed Price

An external intervention (usually by the government) to set a price floor, preventing the market price from falling below a certain level.

Consumers

Individuals or groups that purchase goods or services for personal use.