Labor and Factors of Production Table 18-B Consider the following daily producti

Question

Labor and Factors of Production Table 18-B Consider the following daily production data for MadeFrom Scratch, Inc. Made From Scratch sells cupcakes for $3 each and pays the workers a wage of $325 per day Labor Quantity Marginal Value of the Wage (per Marginal (number of (cupcakes per Product of Marginalday) workers) Product of day) Labor (cupcakes per Labor day) $325 325 325 75 575 Refer to Table 18-B. What is the value of the marginal product of the second worker? O a. $150 O c. $450 O d. $1,050 232.18.1- MC- MANKO

Explanation / Answer

Answer : The correct option is c.

From given table informations we get that,

For 1 labour the quantity level is 200

For 2 labours the quantity level is 350

This means that the marginal product of 2nd worker = total quantity of 2 labours - total quantity of 1 labour = 350 - 200 = 150.

As the selling price of per cupcake is $3 and the marginal product of 2nd labour is 150, hence

The value of 2nd worker's marginal product = Price of per cupcake × Marginal product of 2nd worker = 3×150 = $450 .

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