Chapter 5_Nomor 19 - The value marginal product of an input...

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Nomor 19 Machines Workers Output MP L VMP L Wages 5 0 0 - - - 5 1 600 600 $30,000 $7,000 5 2 1000 400 $20,000 $7,000 5 3 1290 290 $14,500 $7,000 5 4 1480 190 $9,500 $7,000 5 5 1600 120 $6,000 $7,000 5 6 1680 80 $4,000 $7,000 Marginal product of labor (MP L ) is the change in total output divided by the change in labor : MP L = 100 – 600 = 400
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Unformatted text preview: The value marginal product of an input thus is the value of the output produced by the last unit of that input : VMP L = P x MP L = $50 x 400 = $20,000 Since the wage is $7,000, the profit maximizing number of workers is 4....
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