The marginal productivity theory of income distribution An economics textbook pu
ID: 1207772 • Letter: T
Question
The marginal productivity theory of income distribution An economics textbook publishing company is hiring new sales associates to sell textbooks to universities across the country. The company first hires Jack, who increases the number of textbooks sold by 5,000 per year. Next, the company hires Eleanor, who increases the number of textbooks sold by 4,000 per year. Then, the company hires Maria, who increases the number of textbooks sold by 2,000 per year. Finally, the company hires Patrick, who increases the number of textbooks sold by 1,000 per year. The market price of each textbook is $50. The company decides to stop hiring after it hires Patrick, because four additional workers is the profit-maximizing amount of labor. Calculate and enter the value of the marginal product of labor (VMPL) of each worker in the following table. Assume that all the sales associates have the same amount of human capital and are equally skilled at selling textbooks. According to the marginal productivity theory of income distribution, how much will the company pay each sales associate? $200,000 $100,000 $150,000 $50,000Explanation / Answer
VMPL = Price*MPL
VMPL
Jack 50*5000 = $250,000
Eleanor 50*4000 = $200,000
Maria 50*2000 = $100,000
Patrick 50*1000 = $50,000
Wage = Sum of VMPL/No of employess = 600,000/4 = $150,000
If you don't understand anything, then comment, I will revert back on the same.
And If you liked the answer then please do review the same. Thanks :)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.