8.83 Labor Markets and Wages
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Skill Level🔴 Hard
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Skyline Signs in Windham hires technicians in a competitive labor market. Each additional worker adds fewer extra units per hour (diminishing marginal product). The product sells for $10 per unit. Worker hired | Marginal product (units/hr) | Marginal revenue product ($/hr) 1 | 20 | 200 2 | 15 | 150 3 | 10 | 100 4 | 5 | 50 5 | 1 | 10 6 | 1 | 10 7 | 1 | 10 The market wage for a technician is $80 per hour. If the firm wants to maximize profit, how many workers should it hire (assuming one-hour periods and no other costs)?