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Detemining the optimal number of workers

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You have been hired to manage a small manufacturing facility, which has cost and production data given in the table attached.

Workers Total Labor Cost Output Total Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

a. What is the marginal product of the second worker?
b. What is the marginal revenue product of the fourth worker?
c. What is the marginal cost of the first worker?
d. Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.

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Please refer attached file for better clarity of table.

Number of workers Total Labor Cost Output Total Revenue Marginal Cost of labor* Marginal Product MRP
N TLC Q TR MCL* MP** MRP***
1 500 100 700 500 100 700
2 1000 280 ...

Solution Summary

Solution depicts the methodology to calculate marginal cost, marginal revenue product and marginal product. It also determines the optimal number of workers.

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