Marginal Revenue Product of Labor
To better serve customers interested in buying cars over the Internet, Smart Motors, hired Nora Jones to respond to customer inquiries, offer price quotes, and wrote orders fro leads generated by the company's Web site. During the last year, Jones averaged 1.5 vehicle sales per week. On average, these vehicles sold for a retail price of $25,000 and brought the dealership a profit contribution of $1,000 each.
A. Estimate Jones' annual (50 workweek) marginal revenue product
B. Jones earns a base salary of $60,000/yr, and Smart Motors pays an additional 28% of this base salary in taxes and fringe benefits. Is Jones a profitable employee?