When 4 units of labor are employed, total product is 6 units; when 5 units of labor are employed, total product is 8 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 5th unit of labor?

Question

Quizplus · Accepted Answer

Marginal product of labor (MPL) = (change in total product) / (change in labor)
MPL when 4 units of labor are employed = (6-0)/(4-0) = 1.5
MPL when 5 units of labor are employed = (8-6)/(5-4) = 2
Marginal revenue product of labor (MRP) = MPL x Price of output
MRP of the 5th unit of labor = 2 x $5 = $10
Therefore, the best choice is C.

When 4 Units of Labor Are Employed, Total Product Is