1.3. In a market economy, firms with more workers can make and sell more output-that goes without saying. The marginal product oflabor tells you how much extra revenue each extra worker generates. Economists tend to use one particular equation to sum up the link between workers, revenue, and the marginal product of labor: We call it the production function. Let's practice with it just a little here.

a. At Dunder Mifllin, the hourly revenue production function works like this:

Revenue = 100 X y (#of semi-skilled workers)

This is a way of saying that in order to sell product, you actually need workers to do work. Use this formula to fill out the total revenue column below.

Number of Workers 0

2 3

4 5

Total Revenue

$0

$100

$141 Marginal Product of Labor N/A

$100

$41

b. As we mentioned in the chapter, the mar ginal product of labor is the extra revenue that's generated by each extra worker. It's the change in revenue from adding one more worker. Fill out that column, as well.

342 • PART 3 • Firms and Factor Markets

c. If the market wage for semiskilled workers is $25 per hour, how many workers should Dunder Mifllin hire?