Practice Quiz

AP Microeconomics

Category - Microeconomics

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Suppose that a unit of labor costs $20 per hour. The price of the product being made costs $4 per unit. If this is the case, how much must a worker produce in each hour to obtain a marginal revenue product of $60?
  1. 15
  2. 80
  3. 3
  4. 10
Explanation
Answer - A - In this scenario, the worker must produce 15 items an hour to obtain a marginal revenue product of $60.

Key Takeaway: Remember that the equation for marginal revenue product is equal to the marginal product multiplied by the product price: MRPl = MPL x Pprod. In this scenario, we have the marginal revenue product ($60) and we have the product price ($4), but we need the marginal product. You would use the equation: MRPl/Pprod = MPL. $60/4 = 15.
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