Suppose That Labour Is the Only Input Used by a Perfectly

question 32

Essay

Suppose that labour is the only input used by a perfectly competitive firm. The firm can hire workers for $100 per day. Each unit sells for $25. The firm's production function is as follows:
Labour Output
0 0
1 7
2 13
3 18
4 22
5 25
6 27
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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