Question 33

If one more baker is hired the output of a bakery will increase from 1250 breads to 1400 breads per day, but then the bakery will have to reduce the price of the bread from Rs 15 to Rs 14 per unit to sell the additional output, the marginal revenue product of the last baker is .

Solution

Revenue before the last baker is hired$$=1250\times15=18750$$

Revenue after the last baker is hired$$=1400\times14=19600$$

Marginal Revenue Product of the last baker$$=19600-18750=850$$


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