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5. (Table: Abracadabra Processors Ltd.) Number of Workers 3 4 5 6 7 8 9 Number of Computer Chips Produced 900 1,250 1,550 1,800


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5. (Table: Abracadabra Processors Ltd.) Number of Workers 3 4 5 6 7 8 9 Number of Computer Chips Produced 900 1,250 1,550 1,800 2,000 2,150 2.250 (4 pts.) Refer to the figure. Knowing that each computer chip produced sells for $350: A) What is the marginal product of the 5th worker? B) Suppose that unions enter the industry, workers become unionized, and wages rise from $45,000 to $60,000 per year. How many workers will Abracadabra hire? C) The marginal product of labor generally (increases/decreases) as more labor is hired. Why? D) Why will the firm hire the same amount of workers when the wage is between $35,000 to $45,000 per year, but not at $55,000 per year?

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