Murphy's Machinery is a profit-maximizing firm with the following production information. The price of machine parts is $8.
| 0 |
0 |
| 1 |
10 |
| 2 |
25 |
| 3 |
50 |
| 4 |
80 |
| 5 |
95 |
| 6 |
90 |
- At which number of workers is marginal product maximized?
- Identify and define the economic principle that explains why marginal product eventually decreases.
- Why would Murphy's Machinery never hire the 6th worker?
- What is the maximum daily wage Murphy's Machinery would be willing to pay the 3rd worker?