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Marginal Revenue Product: How many workers to hire?

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Complete the following table for the firm below which is selling its product in a perfectly competitive market and hiring labor in a perfectly competitive labor market. State how many workers the firm will hire at various wages. Explain.

TP = Total Product
MP = Marginal Product
MRP = Marginal Revenue Product

Workers TP MP Price MRP
1 12 ______ $10 ______
2 22 ______ 10 ______
3 30 ______ 10 ______
4 36 ______ 10 ______
5 40 ______ 10 ______
6 42 ______ 10 ______

a) How many workers will the firm hire at a wage of:
$20 _______
$30 _______
$40 _______
b) Explain.

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Solution Preview

a) See the attached file for the table.
$20: 6 workers
$30: 5 workers
$40: 5 workers

b)
MRP is the ...

Solution Summary

This solution gives detailed calculations showing how a firm uses Marginal Revenue Product to decide how many workers to hire at a given wage.

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Marginal product, marginal revenue, product marginal cost, and number of workers

I need help in this problem:
You have been hired to manage a small manufacturing facility, which has cost and production data given in the table below.
Total Total
Workers Labor Cost Output 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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