Eco 640 A Fall 2017 Francisco Oller Garcia 12/10/17 3t uiz: Practice quiz Wages

Question

Eco 640 A Fall 2017 Francisco Oller Garcia 12/10/17 3t uiz: Practice quiz Wages his Question: 1 pt 5 of 11 (0 complete) This Quiz: 11 pts p Sony produces MP3 players. The table below depicts the number of MP3 players various quantities of workers can produce per day Output of MP3 Players per Product Quantity of Labor Marginal Product of Labor Marginal Revenue Product of Labor Price 100 15 13 15 28 39 48 1,470 1,218 978 750 534 330 96 94 92 90 60 Suppose the market wage is $400 per day. How many workers should Sony hire to maximize profits? workers. (Enter If the market wage increases to $800 per day, then Sony should hire workers a numeric response using an integer) Enter your answer in each of the answer boxes.

Explanation / Answer

For Maximum profits, # of workers should be such that Marginal Revenue = Marginal Costs

Marginal Costs = $400 per day for each extra unit of labor.

From the table, Marginal Revenue for 5 workers is $534 and for 6 workers is $330.

Thus, # of workers should be 6.

If Marginal Cost = $800, then, MR for 3workers is closest at $750. Thus # of workers should be 4.

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