Table 18-7
Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. Harold's production function is detailed in the table below.

-Refer to Table 18-7.If Harold pays his workers $80 per day and sells his cranberries for $5 per bushel,what is the value of the marginal product of the second worker?

Question

Table 18-7
Harold owns a cranberry bog in which he grows cranberries. Harold's farm is a competitive, profit-maximizing firm. Harold's production function is detailed in the table below.
 
-Refer to Table 18-7.If Harold pays his workers $80 per day and sells his cranberries for $5 per bushel,what is the value of the marginal product of the second worker?

Quizplus · Accepted Answer

The marginal product of labor of the second worker is the additional output produced when the second worker is hired. From the table, we see that when the first worker is hired, 30 bushels of cranberries are produced. When the second worker is hired, the total production increases to 60 bushels, therefore the marginal product of the second worker is 60 - 30 = 30 bushels. 
The value of these 30 bushels is given by the product of the price per bushel ($5) and the marginal product of labor (30 bushels), which equals $5 x 30 bushels = $150. 
Since the worker is paid $80 per day, the value of the marginal product of the second worker is $150 - $80 = $70. 
Therefore, the answer is B, $400.

Table 18-7 Harold Owns a Cranberry Bog in Which He Grows Cranberries