Question

In: Economics

The I taco Company is a profit maximizing firm that produced and sells DVD’s in perfectly...

  1. The I taco Company is a profit maximizing firm that produced and sells DVD’s in perfectly competitive product and labor markets. Each DVD sells for $2 and the wage rate is $20 per day. See the short run production table for DVD’s below:

Quantity of Labor

Number of DVD’s per Day

1

20

2

50

3

75

4

90

5

100

6

105

7

108
  1. What is the marginal revenue product of the 2nd worker?
  2. After which worker hired do diminishing marginal return begin?
  3. What is the marginal product of the 4rth worker?
  4. How many workers will be hired at a wage of $20 a day?
  5. If fixed costs are $30 and 5 labor units are hired, what is the economic profit or loss?
  6. Now assume the rate increases to $30, how many workers will now be hired?

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
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