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How many workers should an apple orchard hire?

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The following schedule shows the production schedule at the delicious Apple Orchard for 2006:
WORKERS TOTAL BUSHELS OF APPLES PER DAY
0 0
1 40
2 70
3 90
4 100
5 105
6 102

If apples sell for $2 per bushel and workers can be hired in a competitive labor market for $30 dollars per day, how many workers should be hired? What if workers unionized and the wage rose to $50? (Hint: Create marginal product and marginal revenue product columns for the table.) Explain your answers clearly.

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Solution Summary

Given an apple orchard's production schedule at different levels of labour, this solution shows how to use marginal analysis to determine the optimum number of workers to hire.

Solution Preview

See the attached file. Profit increases as long as Marginal Revenue Product (MRP) > Wage Rate ...

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