question 14 1 pts table 16 - 1 quantity of labor output (units) 1 80 2 170 3 240 4 300 5 350 6 390 7 420…

question 14 1 pts table 16 - 1 quantity of labor output (units) 1 80 2 170 3 240 4 300 5 350 6 390 7 420 refer to table 16 - 1. suppose the output price is $3. if the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate? there is insufficient information to answer the question. $120 $40 $65

question 14 1 pts table 16 - 1 quantity of labor output (units) 1 80 2 170 3 240 4 300 5 350 6 390 7 420 refer to table 16 - 1. suppose the output price is $3. if the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate? there is insufficient information to answer the question. $120 $40 $65

Answer

Explanation:

Step1: Calculate marginal product of labor (MPL)

MPL when moving from 5 to 6 workers = Output with 6 workers - Output with 5 workers = 390 - 350 = 40 units.

Step2: Calculate value - of - marginal - product of labor (VMPL)

VMPL = MPL×Output price. Given output price = $3. So VMPL = 40×3=$120.

Step3: Recall profit - maximization condition

A firm maximizes profit by hiring labor until VMPL = Wage rate. Since the firm is maximizing profit by hiring 6 workers, the wage rate = VMPL at 6 workers.

Answer:

$120