Answer question 1 on the basis of the following information for a firm operating
ID: 1205861 • Letter: A
Question
Answer question 1 on the basis of the following information for a firm operating in a perfectly competitive output and factor(resource) market
Number of worker days Output (total)
1 100
2 400
3 650
4 850
5 950
If the price of the product is $2 per unit and the firm must pay $450 per worker day for all the workers it needs and the firm operates in a perfectly competitive product and resource market, then to maximize profits, how many worker days should the firm hire?
Explanation / Answer
Based on given data in the table
Let us see weather it will atleast break even
450 200
900 800
1350 1300
1800 1700
2250 1900
The table i have drawn is the multiplication of number of workers with 450 which is given price
Also i have added market price of $2 to output so all figuers now are in dollars
You can clearly see there is no break even and firm, will stil make lose
When 3 workers are hired alteast loss can be minimized.