To maximize profits, a firm uses a fixed amount of capital and varying amounts of labour in its production processes to produce commodity Y. The output fetches Kshs 3 in the market and the firm’s production is as summarized. Number of workers Output per hour 0 0 1 9 2 17 3 24 4 30 5 35 6 39 7 42 8 44 Required; i. Calculate the marginal product of labour for this firm and the value of the marginal product of labour and the Marginal Revenue ii. Suppose that the competitive wage for workers who can make Product Y is Ksh16 per hour. How many workers should this firm hire and why?
To maximize profits, a firm uses a fixed amount of capital and varying amounts of labour in its production processes to produce commodity Y. The output fetches Kshs 3 in the market and the firm’s production is as summarized. Number of workers Output per hour 0 0 1 9 2 17 3 24 4 30 5 35 6 39 7 42 8 44 Required; i. Calculate the marginal product of labour for this firm and the value of the marginal product of labour and the Marginal Revenue ii. Suppose that the competitive wage for workers who can make Product Y is Ksh16 per hour. How many workers should this firm hire and why?
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
Problem 3CQQ
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To maximize profits, a firm uses a fixed amount of capital and varying amounts of labour in
its production processes to produce commodity Y. The output fetches Kshs 3 in the market and
the firm’s production is as summarized.
Number of workers Output per hour
0 0
1 9
2 17
3 24
4 30
5 35
6 39
7 42
8 44
Required;
i.
Calculate the marginal product of labour for this firm and the value of the marginal product
of labour and the Marginal Revenue
ii.
Suppose that the competitive wage for workers who can make Product Y is Ksh16 per
hour. How many workers should this firm hire and why?
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