Holt 7525-9 S15_IT

___ 3. To maximize profits, a producer employs additional factor units up to the quantity where:
a. marginal factor cost is minimized
b. marginal revenue product equals marginal factor cost
c. marginal revenue product is maximized
d. marginal physical product is maximized
Answer questions 4. through 9. after completing the table below. Assume an output price of $4.
Workers Gadgets MPP Total Revenue MRP MFC
0 0 X $0 X X
1 80 80 $320 $320 $180
2 150 70 600 280 180
3 210 ___ ___ ___ 180
4 260 ___ ___ ___ 180
5 300 ___ ___ ___ 180
6 330 ___ ___ ___ 180
7 350 ___ ___ ___ 180
___ 4. What is the marginal physical product of the fifth worker?
a. 40
b. 50
c. 60
d. 70
___ 5. What is the total revenue when four workers are employed?
a. $720
b. $840
c. $1040
d. $1200
___ 6. What is the marginal revenue product of the sixth worker?
a. $40
b. $80
c. $120
d. $160
___ 7. What is the profit-maximizing number of workers to employ?
a. 3
b. 4
c. 5
d. 6
___ 8. If the output price increases to $5, what is the profit-maximizing number of workers?
a. 3
b. 4
c. 5
d. 6
___ 9. If the output price is back to $4, and the MFC increases to $220, what is the profitmaximizing
number of workers?
a. 3
b. 4
c. 5
d. 6
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24 - 11 Factor Markets