Blammo Inc. produces greeting cards in a perfectly competitive market. The table below shows the total number of greeting cards produced using different amounts of labor. The market price for a greeting card is $\$ 4$.
\begin{tabular}{lll}
Units of labor & Total produced & Marginal Product \
\hline 0 & 0 & - \
1 & 100 & 100 \
2 & 220 & 120 \
3 & 300 & 80 \
4 & 360 & 60 \
5 & 400 & 40 \
6 & 400 & 0
\end{tabular}

What is the marginal revenue product of labor (MRP_L) of the fifth worker?

Choose 1 answer:
(A) $\$ 400$
(B) $\$ 0$
(c) $\$ 4$
(D) $\$ 160$
(E) $\$ 60$

Question

Blammo Inc. produces greeting cards in a perfectly competitive market. The table below shows the total number of greeting cards produced using different amounts of labor. The market price for a greeting card is $\$ 4$.
\begin{tabular}{lll} 
Units of labor & Total produced & Marginal Product \
\hline 0 & 0 & - \
1 & 100 & 100 \
2 & 220 & 120 \
3 & 300 & 80 \
4 & 360 & 60 \
5 & 400 & 40 \
6 & 400 & 0
\end{tabular}

What is the marginal revenue product of labor (MRP_L) of the fifth worker?

Choose 1 answer:
(A) $\$ 400$
(B) $\$ 0$
(c) $\$ 4$
(D) $\$ 160$
(E) $\$ 60$

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Marginal Revenue Product of Labor (MRP_L): The MRP_L is the additional revenue generated from employing one more unit of labor. It is calculated as the product of the marginal product of labor (MP_L) and the price of the output. ‖ ‖ b ⋮ Calculation of MRP_L for the fifth worker: The marginal product of the fifth worker is given as 40 units. The market price for a greeting card is $4. Therefore, the MRP_L for the fifth worker is calculated as follows: $$ MRP_L = MP_L \times \text{Price} $$ $$ MRP_L = 40 \times 4 = 160 $$ ‖ ∻Answer∻ ⚹ (D) $160 ⚹ ∻Key Concept∻ ⚹ Marginal Revenue Product of Labor (MRP_L) ⚹ ∻Explanation∻ ⚹ The MRP_L is the additional revenue generated from employing one more unit of labor. For the fifth worker, the marginal product is 40 units, and the price per unit is $4, resulting in an MRP_L of $160. ⚹◊What impact would a decrease in the market price of greeting cards have on the marginal revenue product of labor for Blammo⍭ Generate me a similar question◊

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