Carl opens a shop to produce widgets. He must decide how ma…
Carl opens a shop to produce widgets. He must decide how many workers to employ, each of whom are able to produce some number of widgets. We provide the total number of widgets sold for every possible number of workers in a list here: # of workers total widgets produced 1 6 2 11 3 15 4 18 5 20 6 21 Notice that production here obeys the law of diminishing marginal product. Widgets are sold at a market price of $3 each. Carl must pay each worker employed $5 for their labor. To maximize profits, how many workers does Carl hire? Total profits are $. Now say that wages go up to $7. How many workers does Carl hire now? Total profits are $. Finally, say that wages are set at $13. How many workers does Carl hire? Total profits are $.