Use the information in the table below to answer the next three questions Labor(

Question

Use the information in the table below to answer the next three questions Labor("workers! Outputper Hour 16 20 23 6. The marginal product (MP) of the fourth worker is a. 3 b. 4 d. 6 7. If this firm is selling output in a perfectly competitive market and the price of the output is $2 per unit, then the value of marginal product (VMP) of the third worker is a. $5 b. $10 c. $32 d. $48 8. If the price of the output is $2 per unit and the wage rate is $8 per hour, this profit-maximizing firm should hire workers. a. b. 3 d. 5

Explanation / Answer

6. Option b. 4

7.Option b, $10

8. Option c. 4

The profit maximizing condition is -

Wage = VMPL = P*MPL
8 = 2*MPL
MPL = 4

MPL = 4 when 4 units of workers are hired.

9.a. nurses by hospital
If demand for hospitals increases, then demand for nurses will also increase. Hence it is a derived demand.

Labor TP MPL VMPL = P*MPL 0 0 1 5 5 10 2 11 6 12 3 16 5 10 4 20 4 8 5 23 3 6

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