Schweser Mock Exam 2 AM - question

Q: The zaxon co produces one product and labor is the only variable resource in the production process. In the short run Zaxon faces a horizontal demand curve at $20/unit. The average product of labor in the short run is given in the following table: Resource units Avg product of labor 1 25 2 22.5 3 20 4 17.5 If the price of each unit of labor (worker-days) is $350, an only whole units can be employed, how many units of labor will Zaxon employ? ==> The correct answer is 2, but I’m not sure how to calculate it.

This question is weird!

Calc your revenue … Calc you profit 25*20=500 … 500-1*350=150 22.5*2*20=900 … 900-2*350=200 20*3*20=1200 … 1200-3*350=150 17.5*4*20=1400 … 1400-4*350=0 That’s how i did it