Question

Microeconomics

Posted 4 months ago

```
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) $\$ 60$
```

Sign in to unlock the answer

Answer from Sia

Posted 4 months ago

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.

Not the question you are looking for? Ask here!

Enter question by text

Enter question by image

Upgrade to Asksia Pro

Join a AskSia's Pro Plan, and get 24/7 AI tutoring for your reviews, assignments, quizzes and exam preps.

Unlimited chat query usages

Strong algorithms that better know you

Early access to new release features

Study Other Question