Question

A competitive firm sells its output for $50 per unit. Assume that labor is the only input that varies for the firm. The marginal product of the 10th worker is 10 units of output per day; the marginal product of the 11th worker is 8 units of output per day. The firm pays its workers a wage of $160 per day. For the 10th worker, the value of the marginal product of labor is:____________.

A. $400.
B. $1,280.
C. $500.
D. $250.

Answer 1

C) $500

Step-by-step explanation:

I understand what we need to find is the Marginal Revenue product of labor.

It is given by the formula MRP = Marginal Product * Marginal Revenue

Marginal revenue being the price of $50 so,

For the 10th worker MRP = 10 units * $50 = $500

Marginal revenue product of labor is the total contribution in the revenue of an additional unit of labor.

Hope that helps.