Usain's Cobalt produces cobalt packs in a perfectly competitive labor market, and the market wage is $\$ 20$ per unit of labor.

The firm's marginal product of the $200^{ ext {th }}$ unit of labor is 30 cobalt packs in an hour, and the price of a cobalt pack is $\$ 5$.

What is the firm's marginal revenue product of labor $\left(M R P_{L} ight)$, and what should its hiring strategy be?

Choose 1 answer:
(A) The marginal revenue product of labor is $\$ 5$ and the firm should hire less labor.
(B) $M R P_{L}$ is $\$ 150$; hire more labor.
(C) The marginal revenue product of labor is $\$ 4000$, and the firm should hire more labor.
(D) The marginal revenue product of labor is $\$ 20$ and the firm should hire more labor.

Question

Usain's Cobalt produces cobalt packs in a perfectly competitive labor market, and the market wage is $\$ 20$ per unit of labor.

The firm's marginal product of the $200^{	ext {th }}$ unit of labor is 30 cobalt packs in an hour, and the price of a cobalt pack is $\$ 5$.

What is the firm's marginal revenue product of labor $\left(M R P_{L}ight)$, and what should its hiring strategy be?

Choose 1 answer:
(A) The marginal revenue product of labor is $\$ 5$ and the firm should hire less labor.
(B) $M R P_{L}$ is $\$ 150$; hire more labor.
(C) The marginal revenue product of labor is $\$ 4000$, and the firm should hire more labor.
(D) The marginal revenue product of labor is $\$ 20$ and the firm should hire more labor.

Accepted Answer

∻Solution∻ ‖ a ⋮ Calculation of Marginal Revenue Product of Labor (MRPL): The MRPL is calculated as the marginal product of labor (MPL) multiplied by the price of the output (P). In this case, MPL is 30 cobalt packs per hour and P is $5 per cobalt pack. Therefore, MRPL = MPL × P. ‖ ‖ b ⋮ Numerical Calculation: MRPL = 30 cobalt packs/hour × $5/cobalt pack = $150/hour. ‖ ‖ c ⋮ Hiring Strategy: The firm should hire more labor if the MRPL is greater than the market wage. Since the market wage is $20 and the MRPL is $150, the firm should hire more labor because MRPL > Wage. ‖ ∻Answer∻ ⚹ (B) MRPL is $150; hire more labor. ⚹ ∻Key Concept∻ ⚹ Marginal Revenue Product of Labor (MRPL) ⚹ ∻Explanation∻ ⚹ MRPL is the additional revenue a firm earns from hiring one more unit of labor, and it guides the firm's hiring strategy in a perfectly competitive labor market. If MRPL exceeds the market wage, the firm can increase profits by hiring more labor. ⚹◊What is the formula to calculate the marginal revenue product of labor (MRPL) in a perfectly competitive labor market?⍭ Generate me a similar question◊

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