Table 30.2 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylists, total revenue, and marginal revenue product of the stylists, assuming that a hair stylist charges $60 per appointment. In Table 30.2, as more stylists are hired,

Question

Quizplus · Accepted Answer

As more stylists are hired, there are diminishing returns, meaning that each additional stylist adds less to the total number of appointments that can be scheduled. This is reflected in the decreasing MPP column in Table 30.2. Total revenue increases as more appointments are scheduled, but at a decreasing rate due to diminishing returns. The marginal revenue product of the stylists can be calculated by multiplying the marginal physical product by the price per appointment. As the MPP decreases, so does the MRP. Therefore, all of the choices except for A are incorrect.

Table 302 Shows How Many Hairstyling Appointments a Hair Salon Can