Ajax Corporation is a price-taking firm in a competitive industry that employs only one variable input, labor, to produce a product that sells for $2 per unit. The wage rate is $8 per unit of labor and total fixed costs are $1,000. Fill in the blanks in each column of this table as instructed by the questions below:

(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Units of Labor	Output	Marginal Product	Marginal Revenue Product	Average Product	Average Revenue Product	Marginal Cost	Profit
0	0	xx	xx	xx	xx	xx	______
1	400	______	______	______	______	______	______
2	950	______	______	______	______	______	______
3	1,250	______	______	______	______	______	______
4	1,350	______	______	______	______	______	______
5	1,370	______	______	______	______	______	______
6	1,373	______	______	______	______	______	______
7	1,369	______	______	______	______	______	______
8	1,364	______	______	______	______	______	______

a. Fill in the blanks in columns 3 and 5. Marginal product begins to diminish beyond ________ units of labor. Marginal product is negative beyond _________ units of labor.

b. Compute marginal and average revenue products and fill in the blanks in columns 4 and 6. The sixth unit of labor __________________ (increases, decreases) total revenue by $__________. Decreasing labor usage from four to three units _______________ (increases, decreases) total revenue by $_________.

c. The manager can maximize total revenue by hiring ________ units of labor. The maximum possible value of total revenue is $____________.

d. The manager hires ________ units of labor and produces ___________ units of output in order to maximize profit. At this level of labor usage, ARP = _____________ which is ______________ (greater, less) than MRP.

e. Compute marginal cost and fill in the blanks in column 7. At first, marginal cost ___________ (rises, falls) as marginal product rises, then marginal cost _____________ (rises, falls) as marginal product falls.

f. The profit-maximizing level of output is ______ units because this is the last level of output for which _____________ exceeds _____________, or equivalently, _____________ exceeds _____________ .

g. Compute profit and fill in the blanks in column 8. The optimal level of labor employment and the optimal level of output both result in an identical maximum profit level of $_____________.

h. Now suppose total fixed cost increases to $5,000. Recalculate profit at each level of labor usage (and output) and fill in the blanks in column 9 below. When total fixed cost is $5,000, the optimal level of labor usage is _______ units of labor, and the optimal level of output is ________ units. How high must total fixed costs rise in order for it to be optimal for this firm to shut down? Explain briefly.

(1)	(2)	(9)
Units of Labor	Output	Profit TFC = $5,000
0	0	______
1	400	______
2	950	______
3	1,250	______
4	1,350	______
5	1,370	______
6	1,373	______
7	1,369	______
8	1,364	______