Scenario: Consider a firm that produces and sells a good for the price of $2 in a perfectly competitive market. The following table shows the relationship between the number of workers and the output of this firm. Suppose the labor market from which this firm hires its employees is competitive.

-Refer to the scenario above.What is the value of the value of marginal product of labor when the third worker is hired?

Question

Scenario: Consider a firm that produces and sells a good for the price of $2 in a perfectly competitive market. The following table shows the relationship between the number of workers and the output of this firm. Suppose the labor market from which this firm hires its employees is competitive.
 
-Refer to the scenario above.What is the value of the value of marginal product of labor when the third worker is hired?

Quizplus · Accepted Answer

The value of the marginal product of labor is the change in output divided by the change in labor. When the third worker is hired, output increases from 100 to 118. Therefore, the value of the marginal product of labor is (118 - 100) / (3 - 2) = $18.

Scenario: Consider a Firm That Produces and Sells a Good