Sunshine\'s Organic Market sells organic produce. Assume that labor is the only

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?

Select one: 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.

Explanation / Answer

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

Reason

By adding the 10th worker, the firm is able to make 230-200=30 units of more output, the price is $4. Thus the marginal revenue product of the 10th worker is 30x$4 = $120

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