Question

Kaiser’s Ice Cream Parlor hires workers to produce smoothies. The market for smoothies is
perfectly competitive, and the price of a smoothie is RM4. The labor market is competitive,
and the wage rate is RM40 a day. The table shows the workers total product schedule.
Number of
workers
Quantity produced
(smoothies per day)
1 7
2 21
3 33
4 43
5 51
6 55
a. Calculate the marginal product and marginal revenue product for each worker from the
table above.
b. How many workers will Kaiser’s hire to maximize its profit and how many smoothies a
day will Kaiser’s produce?
c. If the price raises to RM5 a smoothie, how many workers will Kaiser’s hire?

Answer 1