1.The efficient number of workers a firm should hire is at the point where the marginal revenue product of an extra worker (that is, price of product x number of units the worker produces) is equal to the cost or wage of that worker. For example, if you pay your worker $100 per day (the Marginal Cost), as long as that worker continues to bring in more than $100 a day (Marginal Revenue) you may continue to hire more workers. The optimal point is when the wage (or MC) is equal to the revenue (or MR) that the worker generates for the company. That is, where MC = MR.

So, here is a scenario. Amy owns a fish shop. She employs students to sort and pack the fish. The students can pack the following amounts of fish in an hour:

Number of students:

1

2

3

4

5

6

7

8

Quantity of fish (kilograms):

20

50

90

120

140

150

150

140

a.If all fish shops in Amy's area pay their packers $5 an hour, how many students will Amy employ? Assume Amy sells her fish for $0.50 a kilogram. Explain your answer and show all calculations.