Homework SourseAConstruct a table showing the net marginal revenue product
A.Construct a table showing the net marginal revenue product derived from assembly worker employment.
B. How many assemblers would Do-It-Yourself employ at a daily wage rate of $120?
C. What is the highest daily wage rate Do-It-Yourself would pay to hire four assemblers per day?
Stereo Receivers. Do-lt-Yourself, Inc., sells budget-priced stereo receivers, in both kit and fully-assembled forms. Customers who assemble their own receivers benefit from the lower kit price of $100 per receiver. \"Full-service\" customers enjoy the luxury of an assembled receiver, but pay a higher price of $150 per receiver. Both kit and fully assembled receiver prices are stable. The company has observed the following relation between the numbers of assembly workers employed per day and assembled receiver output Number of Finished receivers workers 0 0 3 4 5 14 18 20 21Solution
(a)
The price per assembled receiver is $150.
Following table shows the marginal revenue product schedule -
Finished Receivers
(Total Product)
Marginal Revenue Product
(Marginal Product * Price)
(b)
A firm hire that number of workers corresponding to which marginal revenue product equals wage rate.
If there is no such number in exact manner then firm hires that number of workers upto which marginal revenue product is greater than the wage rate.
The daily wage rate is $120.
The marginal revenue product schedule in part (a) shows that marginal revenue product is greater than the given wage rate upto hiring of 5 workers.
So, Do-It-Yourself would employ 5 assemblers at a daily wage rate of $120.
(c)
The highest wage rate a firm can pay to a stated number if workers is equal to the marginal revenue product of such number of workers.
The marginal revenue product of 4 assemblers per day is $300.
So, the highest wage rate that Do-It-Yourself would pay to hire four assemblers per day is $300.
| Number of Workers | Finished Receivers (Total Product) | Marginal Product | Marginal Revenue Product (Marginal Product * Price) |
| 0 | 0 | - | - |
| 1 | 8 | 8 | (150 * 8) 1,200 |
| 2 | 14 | 6 | (150 * 6) 900 |
| 3 | 18 | 4 | (150 * 4) 600 |
| 4 | 20 | 2 | (150 * 2) 300 |
| 5 | 21 | 1 | (150 * 1) 150 |
