Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. $\begin{array} {| c | c | c | c|}
\text { Units of Labor } & \text { Total Product } & \begin{array} { c }
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { c }
\text { Total } \
\text { Revenue }
\end{array} \
\hline 0 & 0 & & \
\hline 1 & 14 & 14 & \$ 42 \
\hline 2 & & 10 & \
\hline 3 & 30 & & 90 \
\hline 4 & 35 & & \
\hline 5 & 39 & & 117 \
\hline 6 & & & 126 \
\hline 7 & 44 & 2 & 132 \
\hline
\end{array}$ At what price does each shoe shine sell?
A) $1
B) $2
C) $3
D) $2.50

Question

Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. $\begin{array} {| c | c | c | c|} 
\text { Units of Labor } & \text { Total Product } & \begin{array} { c } 
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Revenue }
\end{array} \
\hline 0 & 0 & & \
\hline 1 & 14 & 14 & \$ 42 \
\hline 2 & & 10 & \
\hline 3 & 30 & & 90 \
\hline 4 & 35 & & \
\hline 5 & 39 & & 117 \
\hline 6 & & & 126 \
\hline 7 & 44 & 2 & 132 \
\hline
\end{array}$ At what price does each shoe shine sell?
A) $1
B) $2
C) $3
D) $2.50

Quizplus · Accepted Answer

The price per shoe shine can be determined by dividing the total revenue by the total product. For example, at 1 unit of labor, the total revenue is $42 and the total product is 14, so the price per shoe shine is $42/14 = $3.

Assume Manfred's Shoe Shine Parlor Hires Labor, Its Only Variable