A bakery producing bread reports the following production ...

[ec501234]

A bakery producing bread reports the following production information:
 
   Workers Total Product
  (loaves of bread per hour)
  0 0
  1 35
  2 65
  3 85
  4 100
  5 110
 
  The bread sells in a competitive market at a price of 0.30 each. The firm hires workers in a competitive labor market at a wage of 7 per hour. How many workers should the firm hire? Explain your answer.

Question 2

A firm producing ink pens reports the following production information:
 
   of Workers Total Product
  (boxes of pens per hour)
  0 0
  1 45
  2 80
  3 100
  4 116
  5 126
  6 131
 
  The pens sell in a competitive market at a price of 0.50 per box. The firm hires workers in a competitive labor market at a wage of 9 per hour. How many workers should the firm hire? Explain your answer.

[kthug]

Answer to Question 1

The firm should hire two workers. The marginal revenue product of the second worker is 9 (30 x 0.30), which is greater than the wage of 7 . However, the marginal revenue product of the third worker is only 6 (20 x 0.30), which is less than the wage.

Answer to Question 2

The firm should hire three workers. The marginal revenue product of the third
worker is 10 (20 x 0.50), which is greater than the wage of 9 . However, the
marginal revenue product of the fourth worker is only 8 (16 x 0.50). It would
not be profitable for the firm to hire the fourth worker and thus only three
workers would be hired.

[ec501234]

Excellent

[covalentbond]

TYSM