MPP = Marginal Physical Product, which is the change in TPP divided by the change in the number of employees

AP = Average Product, which is TPP divided by the number of employees

MRP = Marginal Revenue Product, which is the change in TRP divided by the change in the number of employees; since price is constant at $2, we can skip the TRP column and use MRP = MPP x Price.

Since MPP at Q = 3 is given as 8, then TPP at Q = 3 must by 27 (19 + 8)

Since AP at Q = 4 is given as 8.5, then TPP at Q = 4 must be 34 (8.5 x 4)

Since MRP at Q = 5 is given as $12, then MPP at Q = 5 must be 6 ($2 x 6 = $12)

Now you should be able to complete the table.

At a wage rate of $14, how many employees would by hired? Using the MR = MC method, four would be hired.

At a wage rate of $15, how many would be hired? Three, using MR = MC. Remember, MRP must remain above the cost of labor, so Q = 4 doesn’t work.