Questions are based on the data in the following table. Assume that the labor market is perfectly competitive.

$\begin{array}{cc}
\begin{array}{cc}
\underline{\text { Labor }} & \underline{\text { Output }} \
0 & 0 \
1 & 15 \
2 & 29 \
3 & 42 \
4 & 54 \
5 & 65
\end{array}
\begin{array}{r}
\underline{\text { Price }} \
\$ 2.20 \
2.00 \
1.80 \
1.60 \
1.40 \
1.20
\end{array}
\end{array}$

-What are the values of marginal product and the marginal revenue product,respectively,for the fourth worker?
A)$67.20; $9.60
B)$12.60; $9.60
C)$16.80; $8.40
D)$67.20; $62.40

Question

Questions  are based on the data in the following table. Assume that the labor market is perfectly competitive.

$\begin{array}{cc}
\begin{array}{cc}
\underline{\text { Labor }} & \underline{\text { Output }} \
0 & 0 \
1 & 15 \
2 & 29 \
3 & 42 \
4 & 54 \
5 & 65
\end{array}
\begin{array}{r}
\underline{\text { Price }} \
\$ 2.20 \
2.00 \
1.80 \
1.60 \
1.40 \
1.20
\end{array}
\end{array}$

-What are the values of marginal product and the marginal revenue product,respectively,for the fourth worker?
A)$67.20; $9.60
B)$12.60; $9.60
C)$16.80; $8.40
D)$67.20; $62.40

Quizplus · Accepted Answer

The marginal product (MP) of the fourth worker is the additional output produced by the fourth worker, which is the difference in output between four and three workers: 54 - 42 = 12. The price of the output decreases as more is produced, and for the fourth worker, the price is $1.40. Therefore, the marginal revenue product (MRP) is the additional revenue generated by the fourth worker's output, calculated as MP times the price: 12 * $1.40 = $16.80.

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