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 ($)00-1151323011340945575585
|
Pounds of plastic (quantity of resource)
|
Number of assemblies (total product)
|
Price of assemblies ($)
|
|
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:________________.
Attachment:- Circular Flow of Economic Activity.rar