Marginal Analysis of MR, MP and MC Curves
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6. You have been hired to manage a small manufacturing facility, which has cost and production data given in the table below.
(see chart in attached file)
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? Explain you answer.
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Solution Summary
This solution explains in detail how to calculate MR, MP and MC curves followed by an analysis of the steps to arrive at optimal number of resources. MR and MC is plotted on a graph as well.
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** Please see the attached file for the complete solution response **
6. You have been hired to manage a small manufacturing facility, which has cost and production data given in the table below.
(please see the attached file)
Revenue MR
1 $500 500 100 100 $700 700
2 1000 =(100-500)/(2-1)
= 500 280 =(280-100)/(2-1)
= 180 1150 =(1150-700)/(2-1)
= 450
3 1500 =(1500-1000)/(3-2)
= 500 440 =(440-280/(3-2)
= 160 1440 =(1440-1150)/(3-2)
= 290
4 2000 =(2000-1500)/(4-3)
= 500 540 =(540-440)/(4-3)
= 100 1570 =(1570-1440)/(4-3)
= 130
5 2500 =(2500-2000)/(5-4)
= ...
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