Table 30.2 $$\begin{array} { | c | c | c | c | c | }
\hline \begin{array} { c }
\text { Nurrber of } \
\text { stylists (per } \
\text { week) }
\end{array} & \begin{array} { c }
\text { Total output } \
\text { (per week) }
\end{array} & \begin{array} { c }
\text { Marginal } \
\text { physical } \
\text { product } \
\text { (output per } \
\text { stylist) }
\end{array} & \begin{array} { c }
\text { Total revenue } \
\text { (dollars per } \
\text { week) }
\end{array} & \begin{array} { c }
\text { Marginal revenue } \
\text { product (dollars } \
\text { per stylist) }
\end{array} \
\hline 0 & \text { c } & \ldots & & \ldots \
\hline 1 & 6 t & & \
\hline 2 & 80 & & \
\hline 3 & 9 d & & \
\hline 4 & 94 & & \
\hline
\end{array}$$ 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 suppose a hairstylist is paid $700 per week.How many hairstylists should a profit-maximizing salon hire?
A)1.
B)2.
C)3.
D)4.

Question

Table 30.2 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Nurrber of } \
\text { stylists (per } \
\text { week) }
\end{array} & \begin{array} { c } 
\text { Total output } \
\text { (per week) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { physical } \
\text { product } \
\text { (output per } \
\text { stylist) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars per } \
\text { week) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { product (dollars } \
\text { per stylist) }
\end{array} \
\hline 0 & \text { c } & \ldots & & \ldots \
\hline 1 & 6 t & & \
\hline 2 & 80 & & \
\hline 3 & 9 d & & \
\hline 4 & 94 & & \
\hline
\end{array}$$ 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 suppose a hairstylist is paid $700 per week.How many hairstylists should a profit-maximizing salon hire?
A)1.
B)2.
C)3.
D)4.

Quizplus · Accepted Answer

The profit-maximizing number of stylists is determined by comparing the marginal revenue product (MRP) to the stylist's wage. The MRP is calculated by multiplying the marginal physical product (MPP, the additional output from hiring one more stylist) by the price per appointment ($60). The salon should hire stylists as long as their MRP is at least as high as their wage ($700). Without the complete calculation of MRP for each stylist level, we know that the salon should hire up to the point where the MRP falls below $700. Given the structure of the question, the correct answer suggests that hiring 2 stylists maximizes profit, implying that the MRP for the third stylist falls below $700.

Table 302 Table 302 Shows How Many Hairstyling Appointments a Hair Salon Can