The table below shows a competitive firm's short run production function. labor is the firms only variable input, and market price for the firms product is $2 per unit
units of labor units of output
1. how much does the 5th unit of labor add to the firms total revenue?
2. if the wage rate is $200, how many units of labor will the firm employ?
3. if the wage rate is $200,the firm should..........?
4. if market price for the firms product increases to $5 how many units of labor will the firm employ at the wage rate of $200?
1. the 5th unit of labour adds a quantity of 570-490 = 80 unit at $2 = $160 increase in Total Revenue
2. An extra unit of labor ...
A labor and output table are provided (ie. the amount of output at different labor amounts) by the question. The answer discusses optimal solutions given this information for this competitive firm.