Question

Stephan owns a shirt factory. He sells each shirt for $50. Previously, he had 30 employees producing a total of 300 shirts daily. Then Stephan added 10 new employees and noted that production increased to 350 shirts per day. Calculate the value of the marginal product in the range of 30–40 employees.

Answer 1

Answer:

marginal revenue product = $2,500 for the 10 additional workers

Explanation:

The marginal revenue product is the amount of revenue generated by adding a certain number of workers into the production process. The marginal revenue product (MRP) is calculated by multiplying marginal product times the selling price

• the marginal product of the 10 additional workers = 50 shirts per day
• price per shirt= $50

MRP = 50 shirts x $50 per shirt = $2,500

to determine the MRP per worker = $2,500 / 10 workers = $250