Economics Micro & Macro (CliffsAP)

3. Using the information provided, determine the best solution for a pizza producing firm.
   ■ The wage rate of each worker, working an eight hour shift, is $80.
   ■ The price of each pizza produced is $11.

Number Of Workers Pizzas Produced Per Worker Per Day

115

216

313

49

57

66

A. In a short run competitive industry, how many workers should be hired in order to maximize profits?

B. What are some of the reasons that the marginal product of each additional worker decreases?

C. Justify your answer from Part A. Why do you think this many workers should be hired?

D. If the firm wanted to hire one additional worker and make 10% profit, how much should they offer the

additional worker (assume the additional worker is in addition to the profit maximum amount of workers)?

Hint:

■ The marginal product of each worker is given.

■ The price of pizza remains the same.

Part IV: AP Macroeconomics & Microeconomics Tests