Hiring Rule
Homework • Unanswered • Due Today, 11:59 PM
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Labor (#workers) Output per Hour Marginal Product
0
0
1
10
2
18
3
24
4
28
5
30
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X
X
?·
The table above provides the short-run production function for a firm selling output in a perfectly competitive market for a price of
$3 per unit. After calculating the marginal product of each worker and the value of marginal product of each worker, the firm
compares VMP with the wage to determine how many workers it should hire. Assuming the firm operates in a perfectly competitive
labor market with a wage of $8 and follows the profit-maximizing hiring rule, it will hire
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workers
and product
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units of output.
This firm's total revenue will equal $
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. If total fixed costs equal $28 per hour and labor is the only
variable input, then the firms total cost will equal $
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,
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resulting in profit per hour of
