Question

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired; 32 when two workers are hired; 37 when three are hired; and 40 when four are hired. The farmer's product sells for $3 per unit and the wage rate is $13 per worker. The marginal revenue product of the second worker is

Answer 1

The marginal revenue product of second worker is $24 .

Explanation:

The marginal revenue product measures the amount by which the addition of one more worker increases a firm's total revenue.

Given:  

Total product produced by first worker- 24

Total product produced by two workers- 32

Total product produced by three workers- 37

Total product produced by four workers- 40

Cost of one product- $3

Wage of a worker- $13

Marginal revenue product of second worker= $24