Your enterprising uncle opens a sandwich shop that employs 6 people. The employees are paid $12 per hour, and a sandwich sells for $4.

If your uncle is maximizing his profit, the value of the marginal product of the last worker he hired is $, and that worker's marginal product is sandwiches per hour.

Question

Business

Bryant Rivas

22 February, 00:36

Your enterprising uncle opens a sandwich shop that employs 6 people. The employees are paid $12 per hour, and a sandwich sells for $4.

If your uncle is maximizing his profit, the value of the marginal product of the last worker he hired is $, and that worker's marginal product is sandwiches per hour.

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Answers (1)

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Alissa Clarke · Answer 1

if your uncle is maximizing his profit, the value of the marginal product of the last worker he hired will be $12 while that of worker's marginal product will be $2 sandwiches per hour.

Explanation:

Marginal Revenue Product can be seen as the way in which additional revenue is been generated by additional workers.

Price = $6

Wage = $12

Since your enterprising uncle is hiring workers such that their wage is been equals the marginal revenue product.

Hence,

wage = Marginal revenue product

12 = 12

In a situation where the marginal revenue product is 12 then the marginal product will be:

Marginal Revenue Product = Price x MP

MP = Marginal Revenue Product / Price

MP = 12 / 6

MP = 2

Therefore if your uncle is maximizing his profit, the value of the marginal product of the last worker he hired will be $12 while that of worker's marginal product will be $2 sandwiches per hour.