Question

Troll Corporation sells dolls for $10.00 each in a market that is perfectly competitive. Increasing the number

of workers from 100 to 101 would cause output to rise from 500 to 550 dolls per day. The marginal revenue
product for the 101st worker is:
a. $10.00.
b. $500.
c. $5,000.
d. $1,010.

Answer 1

b. $500.

Step-by-step explanation:

The marginal revenue of labour is equal to change in total revenue divided by change in workers.

Revenue = price × output

=$10 × 550 = $5500

=$10 × 500 = $5000

Change in revenue = $5500 - $5000 = $500

Change in workers = 101 - 101 = 1

Marginal revenue = $500 /1 = $500