Question

Suppose that a hospice care organization has been employing one (1) nurse, who generates $500 of revenue per workday. Then, the organization decides to add a second employee, a hospice aide, to assist the nurse. Total revenue then increases to a total of $700 per workday. What are the dollar amounts of the nurse’s and hospice aide’s marginal revenue product (MRP)? Group of answer choices a. Nurse: $500; Aide: $200 b. Nurse: $500; Aide: $700 c. Nurse: $350; Aide: $350

Answer 1

a. Nurse: $500; Aide: $200

Explanation: Initially the nurse was the only worker and her marginal revenue product was equal to the total revenue product = $500. The marginal revenue product of the aide was the additional revenue = $700 - $500 = $200.