Use the information in the table below to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market.
Table 12-6
Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

Question

Use the information in the table below to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market.
Table 12-6
 Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?

Quizplus · Accepted Answer

The marginal revenue product (MRP) of labor is equal to the marginal product of labor (MPL) multiplied by the price of the firm's output. From the table, we can see that the MPL of the fifth unit of labor is 3, and the price of the firm's output is $12. Therefore, the MRP of the fifth unit of labor is 3 x $12 = $36. The best choice would be to hire the fifth unit of labor, as their MRP is higher than their wage of $30.

Use the Information in the Table Below to Answer the Following