A firm increases the number of workers it hires from 50 to 52,and as a result,output increases from 100 to 110.Each of the additional units of output can be sold for $2.What is the marginal revenue product of the 52^nd worker?

Question

Quizplus · Accepted Answer

The marginal revenue product of a worker is calculated as the increase in total revenue that results from hiring an additional worker. In this case, the output increased by 10 units (from 100 to 110) when the firm hired 2 more workers. Therefore, the marginal product of labor (MPL) is:

MPL = (Change in output / Change in labor) = (110 - 100) / (52 - 50) = 5

The marginal revenue product (MRP), which is the additional revenue generated by the MPL, can be calculated as:

MRP = MPL x Price = 5 x $2 = $10

Therefore, the marginal revenue product of the 52nd worker is $10. The best choice is option C.

A Firm Increases the Number of Workers It Hires from 50