Question

Answer the next question(s) on the basis of the following information for Manfred's Shoe Shine Parlor. Assume Manfred hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. Refer to the above data. What is the marginal product of the sixth worker

Answer 1

Answer:

3 units

Explanation:

Each unit sells at $3. We can calculate this by dividing $90 by 30 units = $3 per unit.

Since the total revenue with the sixth worker is $126, the total output = $126 / $3 = 42 units

Marginal product of the sixth worker = total output with six workers - total output with five workers = 42 - 39 = 3

Marginal product refers to the change in total output resulting from an increase in the number of inputs (workers in this case).