ont Paragraph Sties Below is the information on the total amount of output a fir
ID: 1128776 • Letter: O
Question
ont Paragraph Sties Below is the information on the total amount of output a firm can produce using fixed input of one acre of land and different amounts of labor. The firm sells its output for $10 each and pays $100 for its land. TOTAL # OF L TOTAL PRODUC 12) What is the marginal product of the 4th worker?1 100 13) If all the workers are equally skilled, why does 300 worker 4 have a smaller marginal product than 3. 700 .740 14) How much total revenue will this firm make if 770 780 785 788 789 worker 3 they hire 5 workers ? 7 workers and the wage-S30? 6 7. 15) How much is total cost if this firm hires 9 16) How many workers should this firm hire to maximize profits if the Wage $30? 17) How much profit will this firm make if they hire the number of workers you answered for question (16)? 18) How much is total fixed cost for this firm In the long run?Explanation / Answer
12) MPL (4th worker) = 740 - 700 = 40
13) This is because of the law of diminishing marginal returns to a variable input (labour) because the amount of land is fixed.
14) Total revenue = Production x price = 770 x 10 = $ 7700
15) Total cost = 7 x 30 + 100 = $ 310
16) Firm would hire 8 workers because VMPL (8th worker) = $30
VMPL (8th worker) = MPL (8th worker) x Price = (788 - 785) x 10 = $ 30
17) Profit = TR - TC = 7880 - 100 - 30 x 8 = $ 7540
18) In the long run all inputs are variable, there are no fixed costs.
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