Suppose that a new machine is installed that increases the hourly output of labor as follows: Labor 1, output 16; labor 2, output 34; labor 3, output 50; labor 4, output 64; labor 5, output 78; labor 6, output 90. Also assume that all firms in the industry install this machine: The increased demand for labor raises the hourly wage to $6 per hour and the market equilibrium price for the output falls to $0.50. What is the new profit maximizing quantity of labor per hour?

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     5 laborers.
      6 laborers
      1 laborer.
      3 laborers.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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6 laborers
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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