Question

Sam’s Chocolate Bras Production is shown in the following table. It costs Sam’s Chocolate Bras $80...

Sam’s Chocolate Bras Production is shown in the following table. It costs Sam’s Chocolate Bras $80 per day per worker. Each chocolate bar sells $3.

Quantity of Labor

Quantity of Chocolate Bars

0

1

2

3

4

5

6

7

8

0

100

180

240

280

310

330

340

320
  1. Compute the Marginal Product and the value of the Marginal Product that each worker creates.
  2. How many workers should Sam’s Chocolate hire? You need to create a new table here.
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Answer #1

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Sam would hire workers as long as value of marginal product exceeds the wage rate that needs to be paid to workers.Here, wage rate is $80 per day. So, Sam will hire only 5 workers. ( value of marginal product for 6th worker is less than the wage rate so he won't hire 6th worker).

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