The Push$-$Up Machine

Groove$-$econ Incorporated has invented a new machine that generates energy from human push$-$

ups. You have just been hired as the manager in charge of hiring workers. Your goal is to make sure

this firm hires the right amount of workers to maximize profit. Assume that you are hiring workers in a

perfectly competitive LABOR MARKET and that the price of electricity is constant.

Define Marginal Resource Cost $($MRC$)-$

Supply of Labor

Explain why MRC is sometimes called MFC

Explain why the MRC is the equal to the supply of labor

Explain why MRC$/$Wage is constant $($graph MRC on back$)$

Define Marginal Revenue Product $($MRP$)-$

Demand for Labor

Identify how to calculate a workers MRP$-$

Calculate the MP and MRP assuming that each push$-$up can generate $$1$ worth of energy:

Explain why the MRP is the equal to the demand of labor

Explain why MRP eventually begins to fall $($graph MRP on back$)$

Identify the number of workers that the firm should hire. Explain how you determined your answer.