Using the information in the following table, calculate themarginal revenue prod

Question

Using the information in the following table, calculate themarginal revenue product (MRP=MPP*MR).

UnitResources            Total Output       Price              Resource Price
1                                      10                    5                      10
2                                      25                    5                      10
3                                      35                    5                      10
4                                      40                    5                      10
5                                      40                    5                      10

using this data determine how many units or resources the firm willwant to acquire.

Explanation / Answer

The marginal revenue product is the product of Marginal Product andMarginal Revenue. Since this seems to be a case in perfectcompetition (all prices are the same), MRP becomes the product ofMarginal Product and Price. Quantity   MP    Price MRP 1             10     5        50 2      15     5    75 3             10     5        50 4             5       5        25 5    0     5    0 A company will hire workers up to the point where MRP is equal tothe resource price (or the last discrete number for which MRP isstill greater than the resource price).

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