1 CSS Farms sells onions in a competitive market and hires workers from a competitive labor market. Labor is
the only variable input for CSS Farms. The table below shows the workers hired per day, quantity of onions
produced per day, and total costs per day for CSS Farms. The price of an onion is $.50.
# of workers hired
Quantity of Onions
Total Cost
0
0
$10
1
45
$25
2
105
$40
3
145
$55
4
180
$70
5
195
$85
6
200
$100
(a) When the firm hires the third worker, does it experience diminishing marginal returns?
(b) What is the marginal revenue product of the third worker?
(c) Based on the figures in the table above, what is the wage rate?
(d) What is the profit-maximizing number of workers?
(e) If the demand for onions increases, will CSS Farms hire more, fewer, or the same number of workers?
Explain?