3. (TCOs C and D) You have been hired to manage a small manufacturing facility w

Question

3. (TCOs C and D) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below. (20 points) Workers Total Labor Cost Output Total Revenue 1 $100 50 $150 2 $200 175 $275 3 $300 275 $355 4 $400 355 $425 5 $500 425 $485 6 $600 485 $535 7 $700 525 $575 (Part A) (5 points) What is the marginal product of the second worker?. (Part B) (5 points) What is the marginal revenue product (MRP) of the fourth worker? (Part C) (5 points) What is the marginal cost (MC) of the first worker? (Part D) (5 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer. (Points : 20)

Explanation / Answer

1. The marginal product of the second worker: 125

2. The marginal revenue product (MRP) of the fourth worker: 70

3. The marginal cost (MC) of the first worker: $100

4. 2 workers will be hired.Because profit is maximum at this level of worker.

workers total labor cost($) output MP total revenue($) MRP Profit($) 1 100 50 - 150 - 50 2 200 175 125 275 125 75 3 300 275 100 355 80 55 4 400 355 80 425 70 25 5 500 425 70 485 60 -15 6 600 485 60 535 50 -65 7 700 525 40 575 40 -125

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