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Name
Supervisor
Course
Date
HW3-Chapter5
Based on the Table below: (Answer to questions 1-4)
Labor
0
Output
Price
0
$2.20
1
15
2.00
2
29
1.80
3
42
1.60
4
54
1.40
5
65
1.20
1. Calculate marginal product, average product, marginal revenue product and value of
marginal product.
Solution
Marginal revenue = Change in output/ change in labor
Marginal revenue product = marginal revenue x price
Average product = output/ labor
The results can be summarized in the table below;
Labor
Output
Price
Average
product
Marginal
product
Marginal
revenue
product
0
0
2.20
0
1
15
2.00
15
15
30
2
29
1.80
14.5
14
25.2
3
42
1.60
14
13
20.8
4
54
1.40
13.5
12
16.8
5
65
1.20
13
11
15.6
0
2. If the wage is $20.00, how many workers will this profit-maximizing firm choose to
employ?
a.
2
b.
3.
c.
4
d.
Marginal
product
5
Labor
Output
Price
Average
product
Marginal
revenue
product
0
0
2.20
0
1
15
2.00
15
15
30
2
29
1.80
14.5
14
25.2
0
3
42
1.60
14
13
20.8
4
54
1.40
13.5
12
16.8
5
65
1.20
13
11
15.6
3. If the wage is $11.00, how many workers will this profit-maximizing firm choose to
employ?
a.
2
b.
3
c.
4
d.
Marginal
product
5
Labor
Output
Price
Average
product
Marginal
revenue
product
0
0
2.20
0
1
15
2.00
15
15
30
2
29
1.80
14.5
14
25.2
3
42
1.60
14
13
20.8
4
54
1.40
13.5
12
16.8
5
65
1.20
13
11
15.6
0
4. Rather than the product demand schedule shown in the table, suppose this firm sold its
output competitively for a price of $2.00. In this case, how many workers will this profitmaximizing firm choose to employ at a wage of $25.00?
a.
2
b.
3.
If price is $2, then the wage rate is $30
c.
4
d.
5
Therefore, marginal product = 30/2 = 15
If mp is 15, then the output is 1
Labor
Output
Price
Averag...