Question

suppose that the firm pays its workers $60 per day. each unit of output sells for $10. how many workers should the firm hire? a. 4 b. 2 c. 3 d. 1

Answer 1

A business recruits workers up until the point at which the cost of hiring equals the amount of additional income it generate.

What is marginal product of labor?

The change in output caused by a unit or infinitesimal change in the quantity of a production factor, while leaving all other input consumption in the production process constant, is commonly characterized as the marginal product of that factor.

pay rate = cost of recruiting a new employee

Price x (MPI), the marginal product of labor, represents the value of the additional revenue that the company generates.

As a result, the company will hire when:

Wage = the value of the additional income it brings in

As a result, salary is equal to price times the marginal product of labor (MPI) (i)

Consequently, given

a worker's salary is $ 60.

Price = $ 10

Thus, $60= $10 x MPI

MPI = 6

Therefore, the marginal product of using three days of labor is  7 (25-18/4-3).

Four-day labor's marginal product is equal to 30-25/4-3, or five.

Therefore, the fourth day brings in less money than is spent.

Thus, the company should hire 3 employees.

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Answer 2

A company hires workers until the cost of hiring equals the amount of extra income it generates. As a result, the company must hire three people.(option c)

What exactly is the marginal result of labor?

The marginal product of a factor of production is the change in output caused by a unit or infinitesimal change in the amount of that factor while holding all other input usage in the production process constant.

pay rate = the cost of hiring a new worker

The marginal labor product (MPI) represents the value of the additional revenue generated by the company.As a result, the organization will hire when:Wage = the benefit of the extra income it generates.

As a result, salary corresponds cost. Consequently, given a worker's salary is $ 60.

Price = $ 10.

Thus, $60= $10 x MPI

MPI = 6.

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