One seamstress can sew 2 dresses per day and two seamstresses can sew 5 dresses per day.If the marginal revenue product of hiring the second seamstress is $360,then in a competitive product market

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The second seamstress can sew 3 dresses per day (5-2=3) and her marginal revenue product is $360, so the price of one dress is $120 (360/3=120). Therefore, if one seamstress can sew 2 dresses per day, her marginal revenue product is $240 (2*120), and hiring the second seamstress increases total output from 2 to 5 dresses per day, so there are increasing returns to scale. Also, we cannot determine if there are diminishing returns to labor because the information only tells us about the productivity of two seamstresses. The information does not provide any information about the costs or profits, so we cannot determine if the seamstresses are earning zero economic profits in the short run or what the marginal cost of production is.

One Seamstress Can Sew 2 Dresses Per Day and Two