A firm producing ink pens reports the following production information:
# of Workers Total Product
(boxes of pens per hour)
0 0
1 45
2 80
3 100
4 116
5 126
6 131
The pens sell in a competitive market at a price of $0.50 per box. The firm hires workers in a competitive labor market at a wage of $9 per hour. How many workers should the firm hire? Explain your answer.
The firm should hire three workers. The marginal revenue product of the third
worker is $10 (20 x $0.50), which is greater than the wage of $9 . However, the
marginal revenue product of the fourth worker is only $8 (16 x $0.50). It would
not be profitable for the firm to hire the fourth worker and thus only three
workers would be hired.
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In a planned economy,
a. prices are used to coordinate economic activity. b. central planners set production targets and tell producers how to produce. c. high prices discourage use of the most scarce resources. d. central planners allow the price to determine distribution of a product.
The majority of new jobs created in the service sector of the U.S. economy have been in the information sector
a. True b. False Indicate whether the statement is true or false