The accompanying table shows the production function for WAS corporation, which sells wuzzies. 

a. Suppose the equilibrium price of a wuzzy is $2. Given this output price, what is the VMP_L, of the fourth worker hired per hour? What is WAS's total revenue at that level of production? What is the VMP_L, of the sixth worker hired per hour? What is WAS's total revenue at that level of production?

b. What is the maximum amount WAS should pay the fifth worker per hour? If labor is WAS's only cost and all workers are paid the same wage as the fifth worker, how much profit will WAS earn if it hires five workers per hour?

c. What is the maximum amount WAS should pay the sixth worker per hour? If labor is WAS's only cost and all workers are paid the same wage as the sixth worker, how much profit will WAS earn if it hires six workers per hour?

d. Suppose the price of a wuzzy rises to $4, ceteris paribus. What is the maximum amount WAS should pay the fifth worker per hour? If labor is WAS's only cost and all workers are paid the same wage as the fifth worker, how much profit will WAS earn if it hires five workers per hour?

Transcribed Image Text:

Workers/Hour 0 1 2 3 4 5 6 7 Total Product (Wuzzies/Hour) 0 19 36 51 62 72 79 84