Question

XYZ Company is currently experiencing a backlog at its loading dock. A manager figures that if she were to hire an extra worker for $100 per day, then sales volumes would increase by $400, due to the removal of the congestion on the dock. The worker's marginal revenue product is:___________.

a. $300.
b. $400.
c. $100.
d. $500.

Answer 1

$300

Step-by-step explanation:

Data provided as per the question

Increase in volume = $400

Wage rate = $100

The computation of marginal revenue is shown below:-

Marginal revenue = Increase in volume - Wage rate

= $400 - $100

= $300

Therefore for computing the marginal revenue we simply deduct wage rate from increase in volume. So, the marginal revenue is $300.