| Question | Suppose that, at your firm, the relationship between output produced and the number of workers you hire is as follows: Labor Total Product 0 ………………………………….. 0 1 ………………………………….. 12 2 ………………………………….. 23 3 ………………………………….. 32 4 ………………………………….. 38 5 ………………………………….. 42 6 ………………………………….. 45 a. Find the marginal product of labor for each worker. b. Is the relationship between output and labor consistent with the Law of Diminishing Returns? c. Suppose your firm is a perfect competitor in the output market and the labor market. If the price of output is $9 and the wage rate is $27, how many workers should your firm hire? d. If the price of output falls to $3 and the wage remains $27, how many workers should your firm hire? |
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| Subject | business-economics |
