# A firm is producing optimally (maximizing profits) when the price level=$1. It pays a wage rate...

## Question:

A firm is producing optimally (maximizing profits) when the price level=$1. It pays a wage rate of $10 per hour to labor and rents capital for $8 per hour. It sells its product for $20 per unit. At its current production point we can assume that its marginal product of labor (MPL) equals what (Carefully follow all directions for entering numeric answers)?

The production function (with labor on the horizontal axis) has a slope best described as:

A. positive and increasing in value

B. positive but decreasing in value

C. negative but increasing in value

D. negative and decreasing in value

## Marginal Product and Marginal Revenue Product:

The marginal (physical) product is the increase in total output associated with an additional unit of input, such as capital and labor, in production. The marginal revenue product, on the other hand, measures the increase in dollar value of revenue associated with an additional unit of input.

## Answer and Explanation: 1

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View this answer**Question 1**

The marginal product of labor (MPL) equals 0.5.

For the firm to be maximizing profit, it must hire labor up to the point where the...

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