MARKETS AND RESOURCES

Markets and Resources

Markets and Resources

1. Marginal revenue product is defined as the change in total revenue that results from the employment of an additional unit of a resource. A widget producer wishes to determine how the addition of pounds of rubber will affect its MRP and profits. See the table below, and answer each of the questions. (40pts/10pts each)

Pounds of rubber

(quantity of resource)

Number of widgets

(total product)

Price

of widgets ($)

0

1

2

3

4

5

0

20

35

45

50

53

-

12

10

8

6

4

a. The marginal product of the 3rd pound of rubber is ____10___________.

b. The marginal revenue product of the 3rd pound of rubber is ____20____.

c. The price of rubber ...