Kaiser’s produces smoothies. The market for smoothies is perfectly competitive, and the price of a smoothie is $4. The labor market is competitive, and the wage rate is $40 a day. Table 1 shows Kaiser’s total product schedule.

1. Calculate the marginal product and the value of marginal product of the fourth worker.

2. How many workers will Kaiser’s hire to maximize its profit? How many smoothies a day will Kaiser’s produce?

3. If the price of a smoothie rises to $5, how many workers will Kaiser’s hire?

4. Kaiser’s installs a machine that increases the marginal product of labor by 50 percent. If the price of a smoothie remains at $4 and the wage rate rises to $48 a day, how many workers does Kaiser’s hire?

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TABLE 1 Workers 123456 Smoothies per day 7 21 33 43 51 55