2. A profit maximizing firm which hires inputs in competitive markets will hire inputs so the the added revenue of the last unit hired (MRP) is equal to the added cost of hiring. Since this firm must pay workers $30 per hour it will keep hiring workers as long as they contribute at least $30/hour to revenue. Since chairs sell for $5 each the last worker should add 6 chairs to output giving her a MRP of $5 x 6 = $30.

The table to the right has two added columns giving the marginal product (MP) and marginal revenue product (MRP) for each added worker. As we can see, the 5th worker has a MRP of $30 so the firm would hire 5 workers, thus it will produce 33 chairs.
Workers Chairs/HourMPMRP
0 000
1 5525
2 12735
3 20840
4 27735
5 33630
6 38525
7 42420
8 45315


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