Exhibit 10-1 Use the information in the accompanying chart to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market. $$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Units of Labor } \
\text { (per day) }
\end{array} & \begin{array} { c }
\text { Total Output } \
\text { (dollars) }
\end{array} & \begin{array} { c }
\text { Product } \
\text { Price }
\end{array} \
\hline 1 & 15 & 6 \
2 & 30 & 6 \
3 & 40 & 6 \
4 & 48 & 6 \
5 & 54 & 6 \
6 & 59 & 6 \
7 & 62 & 6 \
\hline
\end{array}$$ Refer to Exhibit 10-1. What is the marginal revenue product of the fifth unit of labor?

Question

Exhibit 10-1 Use the information in the accompanying chart to answer the following question(s). The firm hires labor competitively and sells its product in a competitive price-taker market. $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Units of Labor } \
\text { (per day) }
\end{array} & \begin{array} { c } 
\text { Total Output } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Product } \
\text { Price }
\end{array} \
\hline 1 & 15 & 6 \
2 & 30 & 6 \
3 & 40 & 6 \
4 & 48 & 6 \
5 & 54 & 6 \
6 & 59 & 6 \
7 & 62 & 6 \
\hline
\end{array}$$ Refer to Exhibit 10-1. What is the marginal revenue product of the fifth unit of labor?

Quizplus · Accepted Answer

The marginal revenue product (MRP) of the fifth unit of labor is calculated by the increase in total output (in dollars) from the fourth to the fifth unit of labor, multiplied by the product price. From the fourth to the fifth unit of labor, total output increases from 48 to 54 dollars, an increase of 6 dollars. Since the product price is $6, the MRP = 6 dollars increase * $6 = $36.

Exhibit 10-1 Use the Information in the Accompanying Chart to Answer