If the marginal revenue product of the fifth worker hired by a firm is $15 and the price of the last unit of output produced is $5, then the marginal product of the fifth worker is
A)15 units of output if the product market is perfectly competitive
B)3 units of output if the product market is perfectly competitive
C)45 units of output if the product market is perfectly competitive
D)5 units of output if the product producer is a price searcher
E)15 units of output if the product producer is a price searcher

Question

Quizplus · Accepted Answer

The formula for calculating the marginal revenue product is the marginal product of labor multiplied by the price of the output.

In this case, we know that the marginal revenue product of the fifth worker is $15 and the price of the last unit of output produced is $5.

So, we can set up the equation:

$15 = MP * $5

Solving for MP, we get:

MP = $15/$5 = 3

Therefore, the marginal product of the fifth worker is 3 units of output.

Choice B is the correct answer.

If the Marginal Revenue Product of the Fifth Worker Hired