Marginal Revenue Product
Marginal revenue product is defined as the change in total revenue that results from the employment of an additional unit of a resource. A producer wishes to determine how the addition of pounds of plastic will affect its MRP and profits. See the table below, and answer each of the questions.
| Pounds of plastic (quantity of resource) |
Number of assemblies (total product) |
Price of assemblies ($) |
| 0 |
0 |
- |
| 1 |
15 |
13 |
| 2 |
30 |
11 |
| 3 |
40 |
9 |
| 4 |
55 |
7 |
| 5 |
58 |
5 |
a. The marginal product of the 3rd pound of plastic is ________.
b. The marginal revenue product of the 3rd pound of plastic is ______.
c. The price of plastic is $135 per pound. To maximize profit, the producer should produce
__________________.
d. The price of plastic is $135 per pound. To maximize profit, the producer should buy and use: