Suppose you are the President of Fraggle Rock Co., a producer of musical compact discs (CDs). Assume Fraggle Rock Co. operates in a perfectly competitive product and perfectly competitive resource market. The market price (P) for each CD is given at $10 and the market wage rate (w) for labor is given at $160 per worker.
|
# units of labor
|
Total Product
|
Marginal Product (MP)
|
Product Price (P)
|
Total Revenue (TR)
|
Marginal Revenue Product (MRP)
|
|
0
|
0
|
--
|
$10
|
$0
|
--
|
|
1
|
30
|
|
$10
|
|
|
|
2
|
58
|
|
$10
|
|
|
|
3
|
84
|
|
$10
|
|
|
|
4
|
108
|
|
$10
|
|
|
|
5
|
130
|
|
$10
|
|
|
|
6
|
150
|
|
$10
|
|
|
|
7
|
168
|
|
$10
|
|
|
|
8
|
184
|
|
$10
|
|
|
|
9
|
198
|
|
$10
|
|
|
|
10
|
210
|
|
$10
|
|
|
a. Fill in the columns in the table above for MP, TR, and MRP (6pts).
Based on the data above and using the MRP = MRC Rule, find the number of units of labor that this firm should hire (L*). How do you know?