Essay
The table below presents estimates of the maximum levels of output possible with various combinations of two inputs.
Assume that a unit of output sells for $3 and that the firm currently employs three units of capital (K = 3).
(i) What is the marginal product of labor when L = 4?
(ii) What is the average product of labor when L = 4?
(iii) What is the marginal revenue product of labor when L = 4? What is the output elasticity of labor when L = 4?
(iv) If the wage rate of labor is $12, how many units of labor should the firm hire and how many units of output should it produce?
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(i) The marginal product of labor when L...View Answer
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