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 $2.50 per unit, and the wage rate is $19 per worker. The marginal revenue product of the first worker is

Answer 1

Answer: $60

Explanation:

The marginal product is the increase in production that results from an additional worker being hired.

When the first work was hired, the total product was 24. This is the marginal product of the first worker.

The marginal revenue product is:

= Marginal product * selling price

= 24 * 2.50

= $60