Question

Standard Enterprises produces an output that it sells in a highly competitive market at a price of $100 per unit. Its inputs include two machines (which cost the firm $50 each) and workers, who can be hired on an as-needed basis in a labor market at a cost of $2,900 per worker (wage). Based on the following production data, how many workers should the firm employ to maximize its profits? (hint: completing the table below will give you the answer)

Machines	Workers		Output		Marginal Product of Labor		VMP Labor		Wage
2	0	0
2	1	60
2	2	100
2	3	129
2	4	148
2	5	160
2	6	168

Answer 1

Machines	Workers	Output	Marginal Product of Labor	VMP =100*marginal product	Wage	Marginal wage
2	0	0	0	0	0	0
2	1	60	60-0=60	6000	2900	2900
2	2	100	100-60=40	4000	5800	2900
2	3	129	129-100=29	2900	8700	2900
2	4	148	148-129=19	1900	11600	2900
2	5	160	160-148=12	1200	14500	2900
2	6	168	168-160=8	800	17400	2900

The company should employ that number of labor where MW VMP so this is achieved for 3 workers,

So the company should hire 3 workers