Question

anne rents bicycles for her food delivery business. when she rents five bikes, she has a marginal product of 10 deliveries, when she rents six bikes, she has a marginal product of eight deliveries. if she charges $20 per delivered meal, what is the marginal revenue product of the sixth delivery?

Answer 1

The marginal revenue product for the sixth bike is $160, calculated by multiplying the marginal product (eight additional deliveries) by the price per delivery ($20).

Step-by-step explanation:

The student asked how to calculate the marginal revenue product of the sixth delivery, given that Anne charges $20 per delivered meal and that the marginal product decreases from 10 to 8 deliveries when increasing from five to six rented bicycles. The marginal revenue product (MRP) is the additional revenue generated from one more unit of input. In Anne's case, the sixth bike results in a marginal product of eight additional deliveries. Since each delivery is charged at $20, the marginal revenue of the sixth bike can be calculated by multiplying the marginal product by the price per delivery.

To calculate the MRP for the sixth bike: MRP = Marginal Product of the sixth bike × Price per delivery = 8 deliveries × $20/delivery = $160.