Question

4. Marginal resource cost A company operates in a perfectly competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires. In the following table, complete the column for the value of the marginal product of labor (VMPL) at each quantity of workers. Labor (Number of workers) Output (Units of output) Marginal Product of Labor (Units of output) Value of the Marginal Product of Labor (Dollars) 0 0 20 1 20 19 2 39 18 3 57 15 4 72 12 5 84 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. Line segments will automatically connect the points. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1.

4. Marginal resource cost A company operates in a perfectly competitive market, selling each unit of output for a price of $20 and paying the market wage of $330 per day for each worker it hires. In the following table, complete the column for the value of the marginal product of labor (VMPL) at each quantity of workers. Labor Output Marginal Product of Labor Value of the Marginal Product of Labor (Number of workers) (Units of output) (Units of output) (Dollars) 0 0 20 1 20 19 2 39 18 3 57 15 4 72 12 5 84 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. Line segments will automatically connect the points. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. DemandMarket Wage Rate01234540036032028024020016012080400WAGE (Dollars per worker)LABOR (Number of workers) The profit-maximizing quantity of labor at the market wage is   .

Answer 1

Marginal product of labor	Value of marginal product of labor
20	20*20=$400
19	$380
18	$360
15	$300
12	$240

480 wage -740 -400 360 320 Market Wage rate 280 240 Demand 200 -160 120 80 -40 -1 1 2 3 4 5 0 --40 6 Labor

Profit maximising quantity of labor=3

reason- Profit maximising level of labor is where VMPL meets market wage rate.