Rosie's Flower Shop sells floral arrangements for $20 each.If Rosie hires 10 workers,she can sell 600 arrangements per week.If she hires 11 workers,she can sell 650 arrangements per week.Rosie pays each of her workers $400 per week.Which of the following is correct?

Question

Quizplus · Accepted Answer

The marginal revenue product (MRP) is the additional revenue generated by hiring one more worker.

To find the MRP of the 11th worker, we can use the following formula:

MRP = (change in total revenue) / (change in number of workers)

MRP = (650*20 - 600*20) / (11 - 10)

MRP = $1,000

Therefore, option B is correct. Option A is incorrect because marginal profit is the change in profit from hiring one more worker, which would depend on the cost of hiring that worker (in this case, $400 per week) and cannot be determined from the given information. Option C is also incorrect because we cannot determine if the firm is maximizing profit from the information given. Option D is incorrect because the MRP of the 11th worker is positive, meaning that adding an additional worker would increase revenue and potentially profit.

Rosie's Flower Shop Sells Floral Arrangements for $20 Each