Espresso Yourself Coffee Shop hires workers in a competitive labor market to make coffee. The ingredients required to make each cup of coffee cost 50 cents. The coffee shop's hourly output of coffee varies with the number of workers hired, as shown in the table. Each cup of coffee sells for $2.00.
$$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Number df } \
\text { wurkers }
\end{array} & \begin{array} { c }
\text { Caftee } \
\text { (cups/hour) }
\end{array} \
\hline 0 & 0 \
\hline 1 & 25 \
\hline 2 & 45 \
\hline 3 & 60 \
\hline 4 & 70 \
\hline 5 & 75 \
\hline
\end{array}$$
The value of marginal product of the first worker is ________ per hour.
A)$37.50
B)$25.00
C)$2.00
D)$1.50

Question

Espresso Yourself Coffee Shop hires workers in a competitive labor market to make coffee. The ingredients required to make each cup of coffee cost 50 cents. The coffee shop's hourly output of coffee varies with the number of workers hired, as shown in the table. Each cup of coffee sells for $2.00.  
$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number df } \
\text { wurkers }
\end{array} & \begin{array} { c } 
\text { Caftee } \
\text { (cups/hour) }
\end{array} \
\hline 0 & 0 \
\hline 1 & 25 \
\hline 2 & 45 \
\hline 3 & 60 \
\hline 4 & 70 \
\hline 5 & 75 \
\hline
\end{array}$$  
The value of marginal product of the first worker is ________ per hour.
A)$37.50
B)$25.00
C)$2.00
D)$1.50

Quizplus · Accepted Answer

The value of the marginal product (VMP) of the first worker is calculated by taking the additional output produced by that worker, multiplying it by the price at which each unit of output is sold, and subtracting the cost of the ingredients required to make each unit. For the first worker, the output is 25 cups of coffee. Each cup sells for $2.00, so the total revenue generated by the first worker is 25 cups * $2.00 = $50.00. The cost of ingredients for each cup is $0.50, so the total cost of ingredients for 25 cups is 25 cups * $0.50 = $12.50. Therefore, the value of the marginal product for the first worker is $50.00 - $12.50 = $37.50 per hour.

Espresso Yourself Coffee Shop Hires Workers in a Competitive Labor