If the wage phelp to labor is $8 and the price of each unit of output is $2, exactly how many kind of units of labor will be hired?
A firm will certainly hire labor till the marginal revenue product of labor is lower than the expense of labor/wage, which is $8. The marginal revenue product of labor is the marginal product of labor multiplied by the product"s price. The marginal revenue of the fourth unit of labor is $10 (five units multiplied by $2) and also the marginal revenue of the fifth unit of labor is $6 (three devices multiplied by $2). Therefore, the firm will certainly hire four devices of labor.
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A firm is hiring labor in a perfectly competitive labor sector. If the marginal revenue product of labor is greater than the wage rate, which of the adhering to is true?
A profit maximizing firm will hire labor till the marginal product of labor is greater than the wage price. If the marginal product of labor is greater than the wage rate, then the firm need to hire even more labor until the two worths are equal.
Like any type of sector, the profit maximization level is the suggest at which marginal cost equals marginal revenue. In this situation, the marginal price of labor is the labor wage. Hence, the profit maximization suggest for the employer is the suggest at which wage equates to the marginal revenue product of labor.
Refer to the adhering to chart for this question:
If each product is marketed for $2, what is the marginal revenue product of labor for the fourth unit of labor?
The marginal revenue product of labor for the fourth unit of labor is its marginal product multiplied by the cost of the product. The marginal product of the fourth unit of labor is 4 (the distinction in between complete manufacturing at four units of labor and three devices of labor), and cost of the product is $2, so the marginal revenue product of labor for the fourth unit is $8.
See more: One Interesting Thing About Incentive Approaches Is That Incentives __________.
Refer to the following chart for this question:
If each product is sold for $2, and each unit of labor expenses $10, just how many devices of labor will the firm hire?
The firm will certainly hire 3 systems of labor, bereason it will proceed to hire until the wage exceeds the marginal revenue product of labor (MRPL). The MRPL after the third unit of labor is less than $10, which indicates that the firm will not hire even more than 3 units of labor.
The College of Texas at San Antonio, Bachelor in Firm Administration, Economics. Texas Tech College, Doctor of Phil...
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