Asked by
Elizabeth Boychuk
on Dec 08, 2024
Verified
You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $15.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?
A) Hire three data-entry operators so as to minimize the amount of money the firm will lose.
B) Shut down immediately, as the firm is not able to cover all of its variable costs.
C) Increase the wage rate paid to data-entry operators so that their marginal revenue product will increase.
D) Produce as much as possible so as to maximize the difference between the wage paid to data-entry operators and their marginal revenue product.
Marginal Revenue Product
The additional revenue generated from employing one more unit of a resource, such as labor or capital.
Variable Input
An input whose quantity can be changed in the short term by a firm to adjust the level of output.
- Interpret the significance of marginal revenue product in the calibration of optimal labor deployment.
- Ascertain the relationship connecting labor remuneration, productivity, and employment stature within a competitive workforce environment.
Verified Answer
AO
Learning Objectives
- Interpret the significance of marginal revenue product in the calibration of optimal labor deployment.
- Ascertain the relationship connecting labor remuneration, productivity, and employment stature within a competitive workforce environment.