📚 Learning Guide
Calculating Marginal Revenue Product
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To determine the optimal number of employees to hire, a firm calculates the Marginal Revenue Product of Labor (MRPL) by multiplying the marginal revenue by the marginal product of labor. If the marginal revenue is $10 and the marginal product of labor is 3 units, what is the MRPL? The MRPL can be defined as ___.

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Choose the Best Answer

A

$30

B

$15

C

$40

D

$10

Understanding the Answer

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Answer

To find the Marginal Revenue Product of Labor (MRPL), we need to multiply the marginal revenue by the marginal product of labor. In this case, the marginal revenue is $10, and the marginal product of labor is 3 units. So, we calculate MRPL by multiplying these two numbers: $10 times 3 equals $30. This means the MRPL is $30, which represents the additional revenue generated from hiring one more employee. Therefore, the MRPL can be defined as the extra revenue produced by each additional worker hired.

Detailed Explanation

To find MRPL, you multiply the marginal revenue by the marginal product of labor. Other options are incorrect because This answer might come from thinking only about one part of the calculation; This could happen if someone mistakenly adds instead of multiplying.

Key Concepts

Marginal Revenue Product of Labor
Marginal Revenue
Marginal Product of Labor
Topic

Calculating Marginal Revenue Product

Difficulty

medium level question

Cognitive Level

understand

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