question archive 1) A firm will find it profitable to hire workers up to the point at which their: A
1) A firm will find it profitable to hire workers up to the point at which their: A
Subject:BusinessPrice:3.87 Bought7
1) A firm will find it profitable to hire workers up to the point at which their:
A. marginal resource cost equals the wage rate.
B. wage rate equals product price.
C. MP is equal to their MRP.
D. MRP is equal to their marginal resource cost.
2) based on the following information for Manfred's Shoe Shine Parlor.
| Units of Labor | Total Product | Marginal Product | Total Revenue |
| 0 | 0 | ||
| 1 | 14 | 14 | $42 |
| 2 | 10 | ||
| 3 | 30 | 90 | |
| 4 | 35 | ||
| 5 | 39 | 117 | |
| 6 | 126 | ||
| 7 | 44 | 2 | 132 |
Assume Manfred hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. At what price does each shoe shine sell?
Multiple Choice
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$3
-
$2
-
$1
-
$2.50
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Answer:
1) D. MRP is equal to marginal resource cost.
Because MRP is the increase or decrease in revenue due to additional unit resource so as long as cost of adding additional resource is less than or equal to revenue earned due to that resource, firm should add the resource.
2) Since total revenue = amrginal product*number of labor
so, each shoe shine sells for 42/14 = 3
option(A)
