Use information in the above table to answer the following questions The price o
ID: 1112112 • Letter: U
Question
Use information in the above table to answer the following questions
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?
number of workers Daily output 1 10 2 25 3 45 4 60 5 70 6 78 7 80Explanation / Answer
a. MPL = change in output/chnage in number of labour units hired.
VMPL = MPL * price of the output.
b. The firm would hire workers upto a point where the VMPL = wages.
The nearest value where this is reached is at 6 units of workers producing 78 units of output. As long as VMPL > wages, it is profitable for the firm to hire more workers.
c. New VMPL is as follows:
The nearest value where the equilibrium is attained is at 6 workers again. Because at this point also, VMPL > wages.
6 units of workers would be hired if the wages increased to $100 because VMPL > wages.
Workers Output MPL 1 10 nil 2 25 15 3 45 20 4 60 15 5 70 10 6 78 8 7 80 2Related Questions
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