Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is

Question

Quizplus · Accepted Answer

The Marginal Revenue Product (MRP) of the second barber is calculated by the additional revenue generated by hiring the second barber. With one barber, the shop can provide 24 haircuts per day, and with two barbers, it can provide 42 haircuts, an increase of 18 haircuts. Since each haircut is charged at $6, the MRP of the second barber is 18 haircuts * $6 = $108.

Harry Owns a Barbershop and Charges $6 Per Haircut