A Firm's Labor Input,total Output of Labor,and Product Price Schedules

question 122

Multiple Choice

A firm's labor input,total output of labor,and product price schedules are given below.Labor is the only variable input. Refer to the above table and information.How many workers will the firm hire if the wage rate is $8 per day?

• A) 3
• B) 4
• C) 5
• D) 6 The marginal revenue product is the change in revenue earned due to the hiring of one more input.In this case,the fifth worker adds 4 units of output and $9 of revenue because revenue rises from $152 to $161,but the worker only costs $8.At higher levels of workers,the marginal revenue product is less than $8.

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Definitions:

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A graphical representation showing an economy's potential output when all prices, including wages, can fully adjust to changes in the economic environment.

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