Using the information in the table answer the following questions. Number of Dai

Question

Using the information in the table answer the following questions.

Number of Daily output

Workers      

            1 10

            2 25      

            3 45   

            4 60   

            5                                  70

            6                                  78

            7                                  80       

The price of the assembled mother- boards that this firm sells is $30 and the daily wage is $80 per day.

a. Find the Marginal Product (MPL) of Labor. Find the Marginal Revenue Product (Also called the Value of Marginal Product of Labor) of Labor (MRPL)

b. Determine how many workers the firm will hire?

c. Suppose the output price falls from $30 to $20. How would that change your answer to b)? Suppose the wage increases from $80 to $100 and the output price is $30. What is your answer now?

Explanation / Answer

Workers Output MPL Total Revenue at $30 MRL at $30 Total Revenue at $20 MRL at $20 1 10 300 200 2 25 15 750 450 500 300 3 45 20 1350 600 900 400 4 60 15 1800 450 1200 300 5 70 10 2100 300 1400 200 6 78 8 2340 240 1560 160 7 80 2 2400 60 1600 40 Answer:- The firm will hire 3 labours as with 3 labours, the firm is having maximum marginal revenue product Answer:- When the prices fall from $30 to $20, the firm will hire same number oflabours i.e.3

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