Question

Sunshine’s Organic Market sells organic produce. Assume that labor is the only input that varies for the firm. The store manager has determined that if she hires 9 workers, the store can sell 200 pounds of produce per day. If she hires 10 workers, the store can sell 230 pounds of produce per day. The store earns $4 for each pound of produce that it sells, and the manager pays each worker $60 per day. Which of the following is correct?

a. All of the above are correct.
b. The marginal profit from the 10th worker is $120.
c. For the 10th worker, the marginal product is 20 pounds of produce per day.
d. For the 10th worker, the marginal revenue product is $120 per day.

Answer 1

Answer: For the 10th worker, the marginal revenue product is $120 per day.

Explanation:

Here in this case by hiring the $10^{th}$ worker, the store is able to make 30 more units .

Given:

The store earns $4 for each pound of produce that it sells.

Thus the marginal revenue product of the 10th worker = 30×$4 = $120