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9 March, 10:44

Your enterprising uncle opens a sandwich shop that employs 6 people. The employees are paid $12 per hour, and a sandwich sells for $4.

If your uncle is maximizing his profit, the value of the marginal product of the last worker he hired is $, and that worker's marginal product is sandwiches per hour.

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  1. 9 March, 10:58
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    if your uncle is maximizing his profit, the value of the marginal product of the last worker he hired will be $12 while that of worker's marginal product will be $2 sandwiches per hour.

    Explanation:

    Marginal Revenue Product can be seen as the way in which additional revenue is been generated by additional workers.

    Price = $6

    Wage = $12

    Since your enterprising uncle is hiring workers such that their wage is been equals the marginal revenue product.

    Hence,

    wage = Marginal revenue product

    12 = 12

    In a situation where the marginal revenue product is 12 then the marginal product will be:

    Marginal Revenue Product = Price x MP

    MP = Marginal Revenue Product / Price

    MP = 12 / 6

    MP = 2

    Therefore if your uncle is maximizing his profit, the value of the marginal product of the last worker he hired will be $12 while that of worker's marginal product will be $2 sandwiches per hour.
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