-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 compute the marginal physical product (MPP) of each additional stylist, we look at the additional number of appointments scheduled when that stylist is added. For example, the MPP of the third stylist is 30-20 = 10 appointments per week.

To compute total revenue, we multiply the total number of appointments by the price charged per appointment. For example, with three stylists, the salon can schedule 60 appointments per week, for a total revenue of 60 x $60 = $3,600 per week.

To compute the marginal revenue product of each additional stylist, we look at the additional revenue generated when that stylist is added. For example, the marginal revenue product of the second stylist is $1,800 (total revenue with two stylists) - $1,200 (total revenue with one stylist) = $600 per week.

Based on this analysis, the best choice would be to hire the second stylist, as their marginal revenue product of $600 per week is greater than the cost of their salary.

-Table 304 Shows How Many Hairstyling Appointments a Hair Salon Can