Question

3. At Tuxi's, tacos cost $2.50 (p-2.5) and the market wage for labor is $12.50. Calculate the marginal product of labor (MPE), average product of labor (APE), value of the marginal product of labor (MRPE), and value of the average product of labor (VAPE) in the chart below. (2 points) a. Number of Tacos workers 0 EAverage MRPE product Value of the AP MPE 0 15 28 38 47 54 59 62 64 65 4 6 b. What's the optimal amount of labor to use (2 pts)? c. What would be the per-hour profits at Tuxi's if capital costs $50 per hour? (2 points)

Answer 1

Solution:

1)

Number of workers	Tacos	MPE	Average product	MRPE	Value of the AP
0	0
1	15	15	15.00	37.50	37.50
2	28	13	14.00	32.50	35.00
3	38	10	12.67	25.00	31.67
4	47	9	11.75	22.50	29.38
5	54	7	10.80	17.50	27.00
6	59	5	9.83	12.50	24.58
7	62	3	8.86	7.50	22.14
8	64	2	8.00	5.00	20.00
9	65	1	7.22	2.50	18.06

　

Working:

Number of workers	Tacos	MPE	Average product	MRPE	Value of the AP
0	0
1	15	15-0	15/1	15 * 2.5	15*2.5
2	28	28-15	28/2	28 * 2.5	14*2.5
3	38	38-28	38/3	38 * 2.5	12.67*2.5
4	47	47-38	47/4	47 * 2.5	11.75*2.5
5	54	54-47	54/5	54 * 2.5	10.80*2.5
6	59	59-54	59/6	59 * 2.5	9.83*2.5
7	62	62-59	62/7	62 * 2.5	8.86*2.5
8	64	64-62	64/8	64 * 2.5	8*2.5
9	65	65-64	65/9	65 * 2.5	7.22*2.5

　

2) 6 employees is the optimal amount of labor

3) When capital costs $50 per hour, Tuxi’s per-hour profits are: $22.50

Working: (59*2.5) - 50 - (6*12.5) = $22.5