Question: The table below shows the short-run production function for Todd's Trucking Company. Number of Drivers Total Product per Hour 1 8 2 18 3 30

The table below shows the short-run production function for Todd's Trucking Company.

Number of Drivers Total Product per Hour

1 8

2 18

3 30

4 50

5 60

6 65

7 67

8 65

(a) Beginning with which driver do diminishing marginal returns set in for Todd's Trucking Company? Explain using numbers.

(b) Assume Todd's Trucking Company sells its trucking services in a perfectly competitive market at a price of $6. Calculate the marginal revenue product of the third driver.Show your work.

(c) Todd's Trucking Company hires drivers in a perfectly competitive labor market for drivers at a wage rate of $40 per hour, and the market price of services remains $6. How many drivers will Todd's Trucking Company hire to maximize its profit? Explain using marginal analysis.

(d) Assume drivers must pay for a certification exam before they can work in this industry. If the cost of that exam decreases, what will happen to each of the following in equilibrium?(i) The market wage rate. Explain.(ii) The number of workers hired in the labor market. Explain.

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