MarginalTotal Total Marginal neveue Number of product stylists Total output (oup
ID: 1157394 • Letter: M
Question
MarginalTotal Total Marginal neveue Number of product stylists Total output (ouput per dollarsper (dollars per shwlist week) $0 60 80 90 90 Table 30.2 Hairstyling Appointments and Revenues Table 30.2 shows how many hairstyling appointments a hair salon can schedule per weck based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylsts total rovenue, and marginal rovenue product of tho stylists, assuming that a hair stylist chargos $60 per appointment. In Tablo 30.2 suppose a hairstylist is paid $700 por weck. How many hairstylists should a profit maximizing salon hire? 2Explanation / Answer
Number of Stylists Total output MPP Total revenue MRP Per week Per week Output per stylists Per week @ $60 per appointment Dollar per stytlist 0 0 - 0 - 1 60 60 3600 3600 2 80 80 4800 1200 3 90 90 5400 600 4 90 90 5400 0 MPP is the change in physical output due to the additiona of one more unit of variable input, other things remaining the same MPP= Change in total physical product/Change in variable input MRP= Change in total revenue to the addition of one more unit of variable input, other things remaing the same. MrP= Change in total total/Change in variable input If the hair stylist is paid $700 per week, then 2 hair stylists should be hired as the MRP of the second hairstylist ($1200 is > $700) A profit maximizing firm will hire workers up to the point where MRP= Marginal Cost of labor.