The Firm Represented in the Table Above Participates in a Perfectly

question 118

Essay

The firm represented in the table above participates in a perfectly competitive market for its product as well as for labour. Complete the chart and answer the following questions.
a.
If the firm represented in the table above is currently employing two units of labour, should it hire a third? Why or why not?
b.
If the firm represented in the table above is currently employing four units of labour, should it hire a fifth? Why or why not?
c.
If the firm represented in the table above is currently employing seven units of labour, should it hire an eighth? Why or why not?
d.
At what level of employment will the firm be maximizing profit? If it hires one additional unit of labour, what will be the cost?

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Definitions:

Compounded Semi-annually

A method of calculating interest where the interest is added to the principal amount twice a year and then interest is subsequently earned on the new principal.

Amortization Period

The total length of time over which an individual loan or debt is scheduled to be paid off.

Compounded Semi-annually

Compounded semi-annually refers to the calculation of interest where the principal amount is credited with interest twice a year.

Amortization Period

The total time period over which a loan or mortgage is scheduled to be paid off through regular payments.