Quantity of Labor MP of Labor MRP of Labor Quantity of Capital MP of Capital MRP...
| Quantity of Labor | MP of Labor | MRP of Labor | Quantity of Capital | MP of Capital | MRP of Capital |
| 1 | 15 | $45 | 1 | 8 | $24 |
| 2 | 12 | 36 | 2 | 6 | 18 |
| 3 | 9 | 27 | 3 | 5 | 15 |
| 4 | 6 | 18 | 4 | 4 | 12 |
| 5 | 3 | 9 | 5 | 3 | 9 |
| 6 | 1 | 3 | 6 | 2 | 6 |
Refer to the given data. If the prices of labor and capital are $9 and $15, respectively, and labor and capital are the only inputs, the firm's economic profits will be
a. $82.
b. $67.
c. $102.
d. $28.
Homework Answers
Correct Answer:
C
Working note:
5 unit of labor and 3 units of capital will be deployed on the basis of MRP = price as the optimum condition to select the quantity of input.
Economic profit = Profit from the deployment of labor + profit from the deployment of capital
Economic profit = (45+36+27+18+9 - 5*9) + (24+18+15 - 3*15)
Economic profit = $102
Add Answer to:
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