Use the MR = MC method. The answer is 33 employees. Check the right-hand column on p. 815. The firm can't hire 34 workers because marginal revenue product (MRP) falls to $6. MRP must stay above (or be exactly equal to) the marginal cost of hiring more labor, which = $7, since this is a labor market in which the firm can hire as much labor as it wants for $7 per hour.

If the price of the firm’s product was cut in half to $1, then the MRP entries in the right-hand column would be divided by two: Now take the marginal physical product entries in column three and multiply each by $1. These are the new MRP figures. The answer is 30 employees because that is where there is an equality between MRP and the marginal cost of labor.