Question
In: Economics
High Tech, Inc. produces plastic chairs that sell for $15 each. The following table provides information...
High Tech, Inc. produces plastic chairs that sell for $15 each. The following table provides information about how many plastic chairs can be produced per hour.
|
Number of Workers |
Chairs Produced Per Hour |
|
0 |
0 |
|
1 |
10 |
|
2 |
18 |
|
3 |
24 |
|
4 |
28 |
|
5 |
30 |
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $50?
Select one:
a. 2
b. 4
c. 3
d. 5
Solutions
Expert Solution
| Number of Workers | Total Product | Marginal Product | Marginal Revenue Product | Wage | |
| 0 | 0 | -- | -- | -- | |
| 1 | 10 | 10 | 150 | > | 50 |
| 2 | 18 | 8 | 120 | > | 50 |
| 3 | 24 | 6 | 90 | > | 50 |
| 4 | 28 | 4 | 60 | > | 50 |
| 5 | 30 | 2 | 30 | < | 50 |
Marginal Product = Change in Total Product / Change in Workers
Marginal Revenue Product = Marginal Product x Price of Product
Marginal revenue product refers to additional revenue generated by hiring additional workers.
A firm should hire workers until the marginal revenue product is equal to the wage rate.
If marginal revenue product is more than the wage rate then means additional revenue is generated by hiring additional workers is more than the cost of hiring that worker which is a profit for a firm hence a firm should continue till marginal revenue product is equal to the wage rate.
So from the above table, the marginal revenue product is greater than the wage rate till 4 workers.
Hence the firm should hire 4 workers.
Option B is correct
Rahul Sunny answered 2 years agoRelated Solutions
High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information...
High Tech, Inc. produces plastic chairs that sell for $10 each.
The following table provides information about how many plastic
chairs can be produced per hour.
Number of Workers
Chairs Produced Per Hour
0
0
1
10
2
18
3
24
4
28
5
30
For simplicity, assume that labor is the only input. How many
workers will be hired if the hourly wage for workers is $70?
Multiple Choice
2
3
1
4
High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information...
High
Tech, Inc. produces plastic chairs that sell for $10 each. The
following table provides information about how many plastic chairs
can be produced per hour. Number of Workers Chairs Produced Per
Hour 0 0 1 10 2 18 3 24 4 28 5 30
For
simplicity, assume that labor is the only input. How many workers
will be hired if the hourly wage for workers is $120? A) 5 B) More
than 5 C) 0 D) 3
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows:
Standard Quantity
Standard Price (Rate)
Standard Unit Cost
Direct materials (plastic)
12
sq ft.
$
1.10
per sq. ft.
$
13.20
Direct labor
0.25
hr.
$
13.20
per hr.
3.30
Variable manufacturing overhead (based on direct labor
hours)
0.25
hr.
$
2.20
per hr.
0.55
Fixed manufacturing overhead ($579,080 ÷ 934,000 units)
0.62
Parker Plastic had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with rolling
office chairs. Its standard cost information for last year
follows:
Standard Quantity
Standard Price (Rate)
Standard Unit Cost
Direct materials (plastic)
10
sq ft.
$
0.82
per sq. ft.
$
8.20
Direct
labor
0.25
hr.
$
10.20
per hr.
2.55
Variable manufacturing overhead (based on direct labor hours)
0.25
hr.
$
1.40
per hr.
0.35
Fixed
manufacturing overhead $270,600 ÷ 902,000 units)
0.30
Parker Plastic had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows: Standard Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (plastic) 9 sq ft. $ 1.30 per sq. ft. $ 11.70
Direct labor 0.3 hr. $ 13.50 per hr. 4.05 Variable manufacturing
overhead (based on direct labor hours) 0.3 hr. $ 1.30 per hr. 0.39
Fixed manufacturing overhead ($619,080 ÷ 938,000 units) 0.66 Parker
Plastic had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows: Standard Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (plastic) 8 sq ft. $ 1.02 per sq. ft. $ 8.16
Direct labor 0.3 hr. $ 11.10 per hr. 3.33 Variable manufacturing
overhead (based on direct labor hours) 0.3 hr. $ 2.60 per hr. 0.78
Fixed manufacturing overhead ($383,880 ÷ 914,000 units) 0.42 Parker
Plastic had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows:
Standard Quantity
Standard Price (Rate)
Standard Unit Cost
Direct materials (plastic)
12
sq ft.
$
0.61
per sq. ft.
$
7.32
Direct labor
0.1
hr.
$
10.00
per hr.
1.00
Variable manufacturing overhead (based on direct labor
hours)
0.1
hr.
$
0.50
per hr.
0.05
Fixed manufacturing overhead ($160,000 ÷ 800,000 units)
0.20
Parker Plastic had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows:
Standard Quantity
Standard Price (Rate)
Standard Unit Cost
Direct materials (plastic)
12
sq ft.
$
0.63
per sq. ft.
$
7.56
Direct
labor
0.2
hr.
$
10.10
per hr.
2.02
Variable manufacturing overhead (based on direct labor hours)
0.2
hr.
$
0.60
per hr.
0.12
Fixed
manufacturing overhead $252,000 ÷ 840,000 units)
0.30
Parker Plastic
had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows: Standard Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (plastic) 11 sq ft. $ 0.73 per sq. ft. $ 8.03
Direct labor 0.25 hr. $ 10.40 per hr. 2.60 Variable manufacturing
overhead (based on direct labor hours) 0.25 hr. $ 2.00 per hr. 0.50
Fixed manufacturing overhead $326,880 ÷ 908,000 units) 0.36 Parker
Plastic had the following actual results...
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...
Parker Plastic, Inc., manufactures plastic mats to use with
rolling office chairs. Its standard cost information for last year
follows:
Standard Quantity
Standard Price (Rate)
Standard Unit Cost
Direct materials (plastic)
15
sq ft.
$
0.90
per sq. ft.
$
13.50
Direct labor
0.25
hr.
$
12.60
per hr.
3.15
Variable manufacturing overhead
(based on direct labor hours)
0.25
hr.
$
1.80
per hr.
0.45
Fixed manufacturing overhead
$539,400 ÷ 930,000 units)
0.58
Parker Plastic had the following actual results...
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