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

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Marginal Revenue Product of Labor (MRP_L): The marginal revenue product of labor is the additional revenue generated from employing one more unit of labor. It is calculated as the marginal product of labor (MPL) multiplied by the price of the output. ‖ ‖ b ⋮ Calculation of MRP_L: Given that the marginal product of the 200th unit of labor is 30 cobalt packs and the price of a cobalt pack is $5, the MRP_L can be calculated as follows: $$ MRP_L = MPL \times \text{Price} $$ $$ MRP_L = 30 \times 5 = 150 $$ Therefore, the marginal revenue product of labor is $150. ‖ ‖ c ⋮ Hiring Strategy: Since the market wage is $20 per unit of labor and the MRP_L is $150, the firm should hire more labor because the additional revenue generated by hiring an additional worker ($150) is greater than the cost of hiring that worker ($20). ‖ ∻Answer∻ ⚹ (C) $MRP_L$ is $150; hire more labor. ⚹ ∻Key Concept∻ ⚹ Marginal Revenue Product of Labor (MRP_L) ⚹ ∻Explanation∻ ⚹ The marginal revenue product of labor is the additional revenue generated from employing one more unit of labor. In this case, the MRP_L is $150, which is greater than the market wage of $20, indicating that the firm should hire more labor. ⚹◊What is the formula for calculating the marginal revenue product of labor?⍭ Generate me a similar question◊

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