Table 10.2
$$\begin{array} { | c | c | c | c | c | }
\hline \begin{array} { c }
\text { Quantity of } \
\text { labour }
\end{array} & \begin{array} { c }
\text { Output of iPods per } \
\text { Week }
\end{array} & \begin{array} { c }
\text { Marginal Product of } \
\text { labour }
\end{array} & \begin{array} { c }
\text { Product Price } \
\text { (dollars) }
\end{array} & \begin{array} { c }
\text { Wage } \
\text { (dollars) }
\end{array} \
\hline 1 & 8 & 8 & \$ 300 & \$ 350 \
\hline 2 & 15 & 7 & 280 & 350 \
\hline 3 & 21 & 6 & 260 & 350 \
\hline 4 & 26 & 5 & 240 & 350 \
\hline 5 & 30 & 4 & 220 & 350 \
\hline 6 & 33 & 3 & 200 & 350 \
\hline 7 & 35 & 2 & 180 & 350 \
\hline
\end{array}$$
-Refer to Table 10.2.What is the marginal revenue product of labour from the third unit of labour?
A) $5460
B) $1560
C) $1260
D) $780

Question

Table 10.2
 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { labour }
\end{array} & \begin{array} { c } 
\text { Output of iPods per } \
\text { Week }
\end{array} & \begin{array} { c } 
\text { Marginal Product of } \
\text { labour }
\end{array} & \begin{array} { c } 
\text { Product Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Wage } \
\text { (dollars) }
\end{array} \
\hline 1 & 8 & 8 & \$ 300 & \$ 350 \
\hline 2 & 15 & 7 & 280 & 350 \
\hline 3 & 21 & 6 & 260 & 350 \
\hline 4 & 26 & 5 & 240 & 350 \
\hline 5 & 30 & 4 & 220 & 350 \
\hline 6 & 33 & 3 & 200 & 350 \
\hline 7 & 35 & 2 & 180 & 350 \
\hline
\end{array}$$
-Refer to Table 10.2.What is the marginal revenue product of labour from the third unit of labour?
A) $5460
B) $1560
C) $1260
D) $780

Quizplus · Accepted Answer

To calculate the marginal revenue product of the third unit, we look at the change in total revenue from the addition of the third unit of labor.

The total revenue from 2 units of labor is $15,000, and the total revenue from 3 units of labor is $17,580.

Therefore, the marginal revenue product of the third unit of labor is $17,580 - $15,000 = $2,580.

Since the wage for each unit of labor is $2,040, the best choice would be to hire 1 more unit of labor, as the MRP is greater than the wage cost.

Table 102 -Refer to Table 10