When Lionel, an orange grower, hires Terry, Terry's marginal physical product per hour is 9 bushels of oranges. The price is $5 per bushel and the hourly wage rate is $55. Weknow then that

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Terry's marginal revenue product (MRP) is calculated as the marginal physical product (MPP) multiplied by the price of the product. In this case, MPP is 9 bushels per hour and the price per bushel is $5, making the MRP = 9 bushels/hour * $5/bushel = $45/hour. Since Terry's wage rate is $55/hour, which is higher than his MRP of $45/hour, it implies that Lionel is paying more for Terry's labor than the revenue generated by that labor, making it an unprofitable decision to hire Terry.

When Lionel, an Orange Grower, Hires Terry, Terry's Marginal Physical