Question

Macroeconomics

Posted 5 months ago

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The table below shows the marginal revenue product of labor $\left(M R P_{L}\right)$ of a firm producing pillows. The firm uses various amounts of labor, and it can sell as many pillows as it wants for $\$ 10$.
\begin{tabular}{ll}
Labor & MRP \\
\hline 0 & - \\
1 & $\$ 300$ \\
2 & $\$ 250$ \\
3 & $\$ 200$ \\
4 & $\$ 150$ \\
5 & $\$ 100$ \\
6 & $\$ 50$ \\
7 & $\$ 0$
\end{tabular}
What is the marginal product of the fourth worker?
Choose 1 answer:
(A) 50 pillows
(B) 15 pillows
(C) 1 pillow
(D) 10 pillows
(E) 20 pillows
```

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Answer from Sia

Posted 5 months ago

Solution

a

Understanding MRP: The Marginal Revenue Product (MRP) is the additional revenue a firm earns from employing one more unit of labor, assuming all other factors remain constant

b

Calculating Marginal Product: The Marginal Product (MP) of labor is the additional output produced by one more worker. It can be calculated by dividing the MRP by the price of the product, given that MRP = MP × Price

c

Applying the Formula: For the fourth worker, the MRP is $150. Given the price per pillow is$10, we calculate the MP as follows: MP = \frac{MRP}{Price} = \frac{150}{10} = 15 pillows

Answer

15 pillows

Key Concept

Marginal Product of Labor

Explanation

The marginal product of the fourth worker is calculated by dividing the marginal revenue product by the price per pillow, resulting in 15 pillows.

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