Compute and graph the marginal revenue product mrp for each

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Reference no: EM13456081

A firm that is perfectly competitive in product and factor markets has the following production function:

L Q

0 0

1 7

2 15

3 22

4 28

5 33

6 37

7 40

8 42

9 43

a. Calculate and graph the Marginal Revenue Product (MRP) for each unit of labor when the price of the firm's output is $5. Why does the MRP curve have a negative slope?

b. How many units of labor will the firm hire if the wage for each worker is $35 and the product price is $5? Why?

c. If the wage falls to $25 per worker, how many workers will the firm now hire? Why? Show these results in your graph in part a.

Suppose that the price of the firm's product increases to $6 due to an increase in market demand for the firm's product.

d. How many workers will the firm now hire if the wage for each worker is $30? Why? Show this result in a separate graph.

Reference no: EM13456081

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