b. 4 units of labour c. 5 units of labour d. 6 units of labour You are the manag

Question

b. 4 units of labour

c. 5 units of labour

d. 6 units of labour

You are the manager of a firm producing green chalk. The marginal product of labour is: MPL 24L-1/2 Suppose that the firm is a competitor in the green chalk market. The price of green chalk is $1 per unit. Further, suppose that the firm is a competitor in the labour market. The wage rate is $12.00 per hour. What is the marginal revenue product of labour? Select one: a. 0.5L-1/2 b. 2L-1/2 c. 12L-1/2 d. 24L-1/2 The Acme Company is a perfect competitor in its input markets and its output market. Its average product of labour is 30, the marginal product of labour is 20, the price of labour is $20, and the price of the output is $5. For Acme Company, the marginal revenue product of labour is Select one: a. $100 b. $150 C. $400 d. $600 Suppose that a firm's demand curve for its product and the total product of labour are as follows, and labour is the only variable input of production Output Price of the Good Amount of Labour 25 40 54 67 79 90 4 4 How much labour should the firm employ if labour costs $30 a unit? Select one: a. 3 units of labour

Explanation / Answer

1.

D.24L^-1/2

Marginal Revenue product of labor = Price * marginal product = 1*24L^-1/2

Marginal Revenue product of labor = 24L^-1/2

2.

Correct Answer:

A.$100

Marginal Revenue product of labor = price of product*MPL

Marginal Revenue product of labor = 5*20 = $100

3.

Correct Answer:

B

At this level of labor employed, the value of marginal product is more than the cost of labor. Afterwards, the cost of labor ($30) will be higher than the value of marginal product.

Output price of the good Amount of labor Revenue MRPL 25 9 2 225 40 8 3 320 95 54 7 4 378 58 67 6 5 402 24 79 5 6 395 -7 90 4 7 360 -35

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