Question

How many workers will be employed by the profit-maximizing firm labour economics questions?

Answer 1

Answer:

A profit maximising firm should employ workers up to the point where the marginal revenue product of labour = the marginal cost of labour. In this case, when 6 people are employed MRPL and MCL both equal $160. Employing the 7th worker would lead to a fall in total profits.

Answer 2

We know that a profit-maximizing firm will increase its factors of production until their marginal benefit is equal to the marginal cost. Therefore, firms will continue to add labor (hire workers) until the MRPL equals the wage rate. Thus, workers earn a wage equal to the marginal revenue product of their labor................