Figure 18-3
-Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the third worker?
A)$2
B)$10
C)$40
D)$280

Question

Figure 18-3 
-Refer to Figure 18-3. Suppose that the price of the output is $20. What is the value of the marginal product of the third worker?
A)$2 
B)$10 
C)$40 
D)$280

Quizplus · Accepted Answer

The value of the marginal product of a worker is equal to the additional output produced by that worker multiplied by the price of the output. From the graph, we can see that the additional output produced by the third worker is 7 units, which at a price of $20 per unit gives a marginal product value of 7 x $20 = $140. However, we need to consider the change in total product as well. The total product with three workers is 17 units, while the total product with four workers is 24 units. Thus, the additional output produced by the fourth worker is 7 units as well. But since the total product curve is decreasing, the marginal product of the fourth worker is less than the marginal product of the third worker. Therefore, the value of the marginal product of the third worker is $140, which is the highest in the graph. Thus, hiring the third worker would be the best choice.

Figure 18-3 -Refer to Figure 18-3. Suppose That the Price of the Price