The above table has the marginal product schedule for Nick's Dry Cleaners, a perfectly competitive dry cleaning firm
a) If the price to dry clean a blouse is $8 each, complete the last column of the table.
b) If Nick can hire workers at the going wage rate of $16 an hour, how many workers does Nick hire?
Quantity of labor
(workers) Marginal product
(blouses cleaned per day) Value of marginal product
(dollars per day)
1 4 32
2 4 32
3 3 24
4 2 16
5 1 8
a) The completed table is above.
b) Nick hires 4 workers because that is the quantity of workers that sets the value of marginal product equal to the wage rate.
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