Question

Answer the next 3 (three) questions on the basis of the information given in the following table. Complete the table! Total product Employment MRP WNO 12 Product | price $3.00 3.00 3.00 3.00 3.00 3.00 3.00 36.00 66.00 22 36.00 30.00 30 36 40

Answer 1

Ans:

Employment	Total Product	Product Price	TR	MRP
0	0	$3.00	0	--
1	12	3.00	36	36
2	22	3.00	66	30
3	30	3.00	90	24
4	36	3.00	108	18
5	40	3.00	120	12
6	42	3.00	126	6

Explanation:

TR = Price * Output

MRP = Marginal Product * Price

44. Ans: c ) 4 workers

Explanation:

Under perfectly competitive condition , the firm will hire workers where , MRP = Wage rate.

It is cleared from the above table , at the hiring of 4 workers , MRP equals wage rate.

Answer 2

SOLUTION :

Table will be as under :

Employment.    Total products     Price ($)       TR ($)         MR ($)

         0                       0                        3                  0                   -

         1                      12                       3                36                  36

         2                      22                       3                66                  30

         3                      30                       3                90                  24

         4                      36                       3                108                18

         5                      40                       3                120                12

         6                      42                       3                126                  6

Maximum profit occurs when MR = MC 

TR at 3 workers level = 30*3 = 90 ($)

TR at 4 workers level = 36*3 = 108 ($)

So, MR for 4th worker = 108 - 90 = 18 ($)

MC = wage rate = 18 ($).

Hence, at 4 workers level, MR = MC = 18 ($) , maximum profit level.

So, 4 workers will be employed by the firm. (ANSWER).