Production and Price for Firm

Units of Labor

Quantity of Output

Product Price

Marginal Revenue Product

0

0

$1.30

1

220

$1.30

(A)

2

400

$1.30

(B)

3

510

$1.30

(C)

4

600

$1.30

(D)

5

680

$1.30

(E)

6

750

$1.30

(F)

Use the table above. What dollar value goes in blank (E) (i.e. what is the MRP of the 5th worker)?

Note: enter answer with only numerical values and round up to the nearest tenth. For example, if you think the answer is "$101.58" then enter the answer "101.6" in the space below.

Question

Production and Price for Firm

Units of Labor

Quantity of Output

Product Price

Marginal Revenue Product

0

$1.30

1

220

$1.30

(A)

2

400

$1.30

(B)

3

510

$1.30

(C)

4

600

$1.30

(D)

5

680

$1.30

(E)

6

750

$1.30

(F)

Use the table above. What dollar value goes in blank (E) (i.e. what is the MRP of the 5th worker)?

Note: enter answer with only numerical values and round up to the nearest tenth. For example, if you think the answer is "$101.58" then enter the answer "101.6" in the space below.

BlackTom AI · Accepted Answer

To begin, I’ll restate the setup: the table provides units of labor, corresponding quantity of output, and a constant product price of $1.30. The Marginal Revenue Product (MRP) for a given worker is calculated as MRP = Price × MP, where MP stands for the marginal product of labor (the additional output produced by the next worker).

Step 1: Determine marginal products (MP) from the table.
- MP from 0 to 1 worker: Output rises from 0 to 220, so MP1 = 220.
- MP from 1 to 2 workers: Output rises from 220 to 400, so MP2 = 400 − 220 = 180.
- MP from 2 to 3 workers: Output rises from 400 to 510, so MP3 = 510 − 400 = 110.
- MP from 3 to 4 workers: Output rises from 510 to 600, so MP4 = 600 − 510 = 90.
- MP from 4 to 5 workers: Output rises from 600 to 680, so MP5 = 680 − 600 = 80.
- MP from 5 to 6 workers: Output rises from 680 to 750, so MP6 = 750 − 680 = 70.

Step 2: Compute MRP for the 5th worker.
- The fifth worker adds MP5 units of output, and each unit is sold at the price of $1.30, so MRP5 = 1.30 × MP5 = 1.30 × 80.

Step 3: Multiply to obtain the dollar value.
- 1.30 × 80 = 104.0.

Step 4: Consider any rounding instruction.
- The problem asks to enter the numerical value rounded to the nearest tenth. 104.0 rounds to 104.0, which can be entered as 104. If one rounds to a single decimal, 104.0 would be represented as 104.0 or 104, depending on formatting conventions.

Additional note: A common pitfall is confusing MP with total output or assuming a changing price. Here the price is constant at $1.30, so the MRP scales directly with the marginal product of labor. Another potential error is misreading the output differences between consecutive labor units; careful subtraction yields the correct MP values used above.

Princip of Econ-Microeconomics Module 10 Practice Questions: MRP and MFC

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