Sarah's Pretzel Plant produces pretzels according to the function K is the number of ovens, and L is the number of labor hours Sarah uses to produce her pretzels. At the moment, Sarah uses 9 ovens. Also, she plans to hire 64 labor hours. Sarah can sell each unit of pretzels produced for $3.50. Fill in the table below. If Sarah increased her use of labor hours to 65, would the value of the marginal product of labor exceed the wage rate of $8.50?

Question

Sarah's Pretzel Plant produces pretzels according to the function

K is the number of ovens, and L is the number of labor hours Sarah uses to produce her pretzels. At the moment, Sarah uses 9 ovens. Also, she plans to hire 64 labor hours. Sarah can sell each unit of pretzels produced for $3.50. Fill in the table below. If Sarah increased her use of labor hours to 65, would the value of the marginal product of labor exceed the wage rate of $8.50?

Glenmoore Johnson · Accepted Answer

Final Answer :   If Sarah uses 65 hours of labor, the value of the marginal product of the 65th labor hour exceeds the $8.50 cost of labor. This suggests that if Sarah goes beyond 64 units of labor hours, her profits will be higher.

Definitions

Learning Objectives

Learning Objectives

Related questions