Chapter 13R, Problem 7MCQ

To determine

The correct option that defines the marginal revenue product of labor for second worker.

Answer to Problem 7MCQ

Option c is correct.

Explanation of Solution

Explanation for correct option:

Given Information:

Number of workers	Total output/hour
1	10
2	22
3	30
4	36
5	40
6	43
7	45
8	46

c.

The marginal revenue product can be determined by dividing the change in output level and the change in number of workers. When second worker is added then the increased in output level is 12 (22-10). So, the marginal revenue will be $24 (output level i.e. 12 multiplied by selling price per unit i.e. $2). Therefore, option c is correct

Explanation for incorrect options:

Since, question is calculation based, all other options except c are incorrect.

Economics Concept Introduction

Factor of production: Factor of production refers to the components or the resources that are required for producing intangible or tangible products.

Factor income: Factor income refers to returns received by the producer for inserting each factor of production as an input.