Consider the following daily production data for MadeFromScratch, Inc. MadeFromS

Question

Consider the following daily production data for MadeFromScratch, Inc. MadeFromScratch sells cupcakes for $3 each and pays the workers a wage of $325 per day.

Labor
(number of
workers)

Quantity (cupcakes
per day)

Marginal
Product of
Labor
(cupcakes
per day)

Value of the
Marginal
Product of
Labor

Wage
(per day)

Marginal
Profit

0

0

$325

1

200

$325

2

350

$325

3

475

$325

4

575

$325

Refer to Table 18-11. What is the sixth worker's marginal product of labor?

Select one:

a. 140 cupcakes

b. 160 cupcakes

c. 100 cupcakes

d. 120 cupcakes

Labor
(number of
workers)

Quantity (cupcakes
per day)

Marginal
Product of
Labor
(cupcakes
per day)

Value of the
Marginal
Product of
Labor

Wage
(per day)

Marginal
Profit

0

0

$325

1

200

$325

2

350

$325

3

475

$325

4

575

$325

Explanation / Answer

Ans:

Marginal product is the additional output from employing an additional labor.

Marginal profit = marginal revenue - marginal cost

Marginal revenue = marginal product * $3

Table

The fourth workers worker's marginal product of labor is 100 cupcakes.

Labor Quantity Marginal product Marginal revenue wages Marginal profit 0 0 0 0 $325 -$325 1 200 200 $600 $325 $275 2 350 150 $450 $325 $125 3 475 125 $375 $325 $50 4 575 100 $300 $325 -$25

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