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, as more stylists are hired,

Question

Quizplus · Accepted Answer

As more stylists are hired, the number of appointments that can be scheduled initially increases rapidly but eventually reaches a point where the increase in appointments slows down. This reflects diminishing returns, which means that each additional stylist contributes less and less to the total output of appointments. Total revenue will increase as more appointments are scheduled, but the marginal revenue product (MRP) of the stylists will eventually start to decline as the MPP of each additional stylist decreases. Therefore, the best choice is A, as there are diminishing returns.

Table 304 Shows How Many Hairstyling Appointments a Hair Salon Can