Suppose the marginal product of the second worker hired by a firm is 3 units and the price of the last unit produced is $7.Which of the following is true of the marginal revenue product of the second worker?
A)It equals $21.
B)It is less than or equal to $21.
C)It is greater than $21.
D)It equals $21 only if the firm is a price maker.
E)It equals $7.

Question

Quizplus · Accepted Answer

The marginal revenue product of a worker is calculated by multiplying the marginal product of the worker by the price of the output produced. In this case, the marginal product of the second worker is 3 units and the price of the output produced is $7, so the marginal revenue product of the second worker is 3 units x $7 = $21. However, since the question asks about the marginal revenue product of the second worker specifically, it is important to note that the contribution of the first worker has already been accounted for. Therefore, the marginal revenue product of the second worker is less than or equal to $21.

Suppose the Marginal Product of the Second Worker Hired by a Firm