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

Answer: Marginal revenue product of the second worker is $24.

Explanation: Marginal revenue product is the addition to total revenue when one unit of a good is produced and sold in the market. It is given by,

$MRP = MR * MP_{L}$

Marginal Product of the second worker is

$MR_{2} = TR_{2} - TR_{1} = 32 - 24= 8$

Marginal revenue is the addition to total revenue when one more unit of a good is produced. Since, the price is $3 the marginal revenue of an additional output is $3.

$MRP_{2} = 3 * 8 = 24$

Marginal Revenue Product of the second worker is $24.