Table 30.4 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 hairstylists, total revenue, and the marginal revenue product of the stylists, assuming that a hairstylist charges $60 per appointment. In Table 30.4, what is the marginal revenue product of the second hairstylist?

Question

Quizplus · Accepted Answer

To find the marginal physical product (MPP) of the hairstylists, we can take the difference between the total number of appointments with n stylists and the total number of appointments with n-1 stylists. For example, the MPP of the second stylist is:

MPP of the second stylist = Total appointments with 2 stylists - Total appointments with 1 stylist
= 60 - 30
= 30 appointments per week

To find total revenue, we can simply multiply the number of appointments by the price per appointment:

Total revenue with 2 stylists = 60 x 60
= $3,600 per week

To find the marginal revenue product (MRP) of the stylists, we can take the difference between total revenue with n stylists and total revenue with n-1 stylists. For example, the MRP of the second stylist is:

MRP of the second stylist = Total revenue with 2 stylists - Total revenue with 1 stylist
= 3,600 - 1,800
= $1,800 per week

Therefore, the best choice is B, $1,200 per week.

Table 304 Shows How Many Hairstyling Appointments a Hair Salon Can