Assume we have a firm's per-day production dа ta: one person can produce 8 units, 2 people can produce 15 units, 3 people can produce 18 units, and 4 people can produce 20 units. If the per-unit price of the good produced is $5 and daily per-person wages are $27, how many people should the firm hire?

1 person.

Explanation:

For one person;

Wage = $27

Total Cost of units = 8*5 = $40

Per unit profit = (40-27) / 8 = $1.625 per unit

For two people;

Wage = $27 * 2 = $54

Total Cost of units = 15*5 = $75

Per unit profit = (75-54) / 15 = $1.4 per unit

For three people;

Wage = $27 * 3 = $81

Total Cost of units = 18*5 = $90

Per unit profit = (90-81) / 18 = $0.5 per unit

For four people;

Wage = $27 * 4 = $108

Total Cost of units = 20*5 = $100

Per unit profit = (100-108) / 20 = - $0.4 per unit

Therefore, for the four cases the maximum profit per unit is $1.625, with one person. And since there is no production limits (minimum). So, the firm should hire 1 person.