Marginal Revenue Product & Marginal Cost
You have been hired to manage a small manufacturing facility which has cost and production data given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730
a) What is the marginal product of the second worker?
b) What is the marginal revenue product of the fourth worker?
c) What is the marginal cost of the first worker?
d) Based on your knowledge of marginal analysis, how many workers should you hire?