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:

$250

Explanation:

Data provided in the question:

Selling price of each shirt = $50

Initial number of employees = 30

Initial short production = 300

Change in number of employees = 10

Final number of employees = 30 + 10 = 40

New level of production = 350

Change in production of number of shirts = 350 - 300 = 50

Now,

The marginal product in the range of 30-40 employees

= ( Change in production of shirts ) ÷ ( Change in number of employees )

= 50 ÷ 10

= 5

Now,

the value of the marginal product = Price of each shirt × marginal product

= $50 × 5

= $250