Question

Total plocal prodal per Margal product (ablar Totalcat (dollar per Tel 01 Assume that the product price is $4 per unit and that the hourly wage for workers is $12 Neither price nor wage changes with output In Table 30.1, the marginal revenue product of the second worker hired is 524 per hour $40 per hour So per hour Super hour

Answer 1

Answer

The correct answer is (a) $24 per hour.

Marginal revenue Product is the extra revenue earned when a firm hires one additional unit of input(here Labor or worker).

Mathematically, Marginal Revenue Product = Price*Marginal Product.

Price = Price of output = 4.

Formula :

MP(L) = TP(L) - TP(L - 1)

where MP(L) = Marginal Product of L^th unit of labor and TP(L) = Total Output when L units of labor are hired.

Thus MP(2) = TP(2) - TP(1) = 10 - 4 = 6

Thus, Marginal Revenue Product of second unit of labor = P*MP(2) = 4*6 = 24

Hence, the correct answer is (a) $24 per hour.