Question

A firm is a competitive seller of output at amarket price of $3. The only resource itrequires to create its product is labor, which itpurchases competitively at a wage rate of $6per hour. The last worker it employs increasestotal output from 36 to 40 units per hour.What is the marginal revenue product for thisworker?(A) $3
(B) $6
(C) $12(D) $24
(E) $40

Answer 1

Answer:

B. $6

Explanation:

Marginal revenue for the worker = change in wage ÷ change in quantity output

Change in wage = (40×$6) - (36×$6) = $240 - $216 = $24

Change in quantity output = 40 - 36 = 4

Marginal revenue for the worker = $24 ÷ 4 = $6