Question

Suppose LA.Banana employs workers to harvest bananas. Answer the following questions using the information provided below:

Quantity of labour:

1. 0 labour
2. 1 labour
3. 2 labour
4. 3 labour
5. 4 labour
6. 5 labour
7. 6 labour

Units of Output:

1. 0 banana
2. 16 banana
3. 21 banana
4. 25 banana
5. 31 banana
6. 36 banana
7. 40 banana

a.) Calculate the marginal product of labor, the value of the marginal product of labor, and the marginal profit ,suppose a fully competitive company, LA"Banana, where wages are fixed at $800 and each banana (output) sells for $20. 

Answer 1

Marginal Product of labor is the additional output caused by the 1 unit change in labor . 

VMPL is value of marginal product of labor which is equal to Price times the marginal product .

$Profit = Revenue - Cost$

Cost is given to be fixed as 800

$Revenue = Price \times Quantity$