(a) Explanation Marginal product can be calculated using the following formula: Marginal product = Total output present − Total output previous Units of labor present − Units of labor previous (1) Substitute the respective values in Equation (1) to calculate the marginal product for variable second unit. The marginal product of first unit is same as 14. Marginal product = 26 − 14 2 − 1 = 12 1 = 12 The marginal product for second unit is 12. The total revenue can be calculated using the following formula: Total revenue = Price × Total output (2) Substitute the respective values in Equation (2) to calculate the total revenue for the first unit. Total revenue = 5 × 14 = 70 The total revenue for first unit is 70 (b) To determine Number of labor employed at $40 wage rate. (c) To determine Effects of increase in wage rate.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN: 9781305506725

Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher: Cengage Learning

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Question

Chapter 25, Problem 12CQ

(a)

To determine

Calculate the marginal product, total revenue, and marginal revenue product.

(b)

To determine

Number of labor employed at $40 wage rate.

(c)

To determine

Effects of increase in wage rate.

Expert Solution & Answer

Chapter 25 Solutions

Economics: Private and Public Choice (MindTap Course List)

Ch. 25 - Prob. 1CQ Ch. 25 - Prob. 2CQ Ch. 25 - Prob. 3CQ Ch. 25 - Prob. 4CQ Ch. 25 - Prob. 5CQ Ch. 25 - Prob. 6CQ Ch. 25 - Prob. 7CQ Ch. 25 - Prob. 8CQ Ch. 25 - Prob. 9CQ Ch. 25 - Prob. 10CQ

Ch. 25 - Prob. 11CQ Ch. 25 - Prob. 12CQ Ch. 25 - Prob. 13CQ Ch. 25 - Prob. 14CQ

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