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Only labour is used to produce mugs, which sell for $5 each. Labour is hired under perfectly competitiveconditions and themarketwage is $22.50per hour.Theproduction functionfor mugs
Only labour is used to produce mugs, which sell for $5 each. Labour is hired under perfectly competitiveconditions and themarketwage is $22.50per hour.Theproduction functionfor mugs is given by the followingtable: (15 Marks) Number of Workers Mugs per Hour 0 0 1 12 2 22 3 28 4 33 5 37 6 40 a) Augmentthe tableby calculating themarginalproductoflabour,totalrevenue, and marginalrevenueproductoflabour.(Remembertoputmarginalitemsin between units.) b) At the market wage, how many workers will the firm hire in order to maximize profit? c) Suppose that a shortageofworkers causesthe competitivewage forworkerswho can make coffee mugsto rise to $27.50 per hour. Now how many workers will thisfirm hire? d) Suppose thatschoolsthatteach pottery skillsincrease the supply ofworkersthat can make coffeemugs, which lowersthe competitivewage for coffeemug workersto $17.50 per hour. Nowhowmanyworkers willthe firmhire?Doesthisrepresent a shift in the firm's demand for labour curve or a movement along the firm's demand for labour curve
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