Free Labour Markets and Factor Pricing Quiz: MRP, Minimum Wage, Unemployment, Lorenz Curve and Economic Rent

Distribution, Labour Markets, and Factor Pricing

Question 1 of 5

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A firm sells its output in a perfectly competitive market at$5per unit and hires labour in a perfectly competitive labour market. Its daily production schedule is shown below.

Number of workers	Total product (units per day)
0	0
1	20
2	38
3	54
4	68
5	80
6	90

If the daily wage is$65, how many workers will the profit-maximising firm hire, and how many will it hire if the wage falls to$55?

Select one option.

3 workers at $65 and 4 workers at $55
6 workers at $65 and 6 workers at $55
5 workers at $65 and 6 workers at $55
4 workers at $65 and 5 workers at $55
4 workers at both wages, because the demand for labour does not depend on the wage

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