Quiz: The Markets for Labor & Other Factors of Production C Subomit This Questio
ID: 1103679 • Letter: Q
Question
Quiz: The Markets for Labor & Other Factors of Production C Subomit This Question: 1 pt 10f 82 complete) This Quiz: 10 pts possibl Frank Gunter owns an apple orchard. He employs 39 apple pickers and pays them $10 per hour to pick apples, which he sells for $5.00 per box. If Frank is maximizing profits, what is the marginal revenue product of the last worker he hired? What is that workers marginal product? Marginal revenue product of the last worker ] per hour (Enter your response as an integer.) Marginal product of the last workerboxes per hour (Enter your response as an integer.) Enter your answer in each of the answer boxes. Economics Chegg tuto can help right nowExplanation / Answer
A)
Total labour = 39. Wage rate = $10/hr. Selling rate is $5/box.
Now, to maximize profit, frank must produce 2 boxes/hr so as to just cover the wages cost ie $10/hr.
(i) Hence, the marginal product of the last worker is 2 boxes/hr
(ii) Now, since marginal revenue product of the last worker is marginal product of labour x marginal revenue i.e. 2 box/hr * $5/box = $10/hr. Hence, marginal revenue product of the last worker = $10/hr
B)
Given that market wage rate is $12/hr. So in this case the marginal cost of additional labour is $12.
Now, firms maximize profit when MR=MC, and in the labor market this means that firms will hire more employees until the marginal cost of labor equals the MRP ie the firm will hire workers until the last worker hired gives a marginal revenue product of $12. From the graph we see that the corresponding # of labours to be hired is for 4 hours
The answer is 4 hours of labour
C)
Marginal product of the 3rd worker is 70-60 = 10. Marginal revenue = $100 per unit. So marginal revenue product = marginal product of labour x marginal revenue ie 10*$100 = $1000.
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