In the short run, a tool manufacturer has a fixed amount of capital. Labor is a
ID: 1113725 • Letter: I
Question
In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and utput structu that the firm faces is depicted in the table below. Assume the product price is $2. Calculate the marginal revenue product and the marginal resource cost, and then complete the table. Instructions: Enter your answers as whole numbers. Marginal Hourly Total LaborReource arginal Quantity of Total ProductProduct Product ($) Rate (S) Marginal Revenue WaCost () (Labor) Cost (5) 10 200 18 16 14 12 10 234 13 14 15 108 130 154 180 10 2601 12 The equilibrium wage rate (s) The equilibrium level of labor use = workers Reference linksExplanation / Answer
Ans:
Marginal product is the additional output from employing additional unit of labor
Marginal revenue = Marginal product * $2
Table showing marginal revenue product and marginal resource cost.
The profit maximizing level of output is where marginal revenue is equal to marginal cost,which is 260 units
The equilibrium wage rate is $11
The equilibrium level of labor use = 14
Quantity of labor Total product Marginal product Marginal revenue product($) Hourly wage rate($) Total labor cost($) Marginal labor cost($) 10 200 200 400 7 70 70 11 218 18 36 8 88 18 12 234 16 32 9 108 20 13 248 14 28 10 130 22 14 260 12 24 11 154 24 15 270 10 20 12 180 26