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DoveNinja763537 DoveNinja763537
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2 weeks ago
The table shows the number of workers (L) and the output of bouncy balls (Q) each week. The bouncy ball producer is a price taker in both the product and labor markets.
Number of Workers (L)Output of Bouncy Balls (Q)
00
141​
297​
3144​
4184​
5205​
6225​
Assume the price of a bouncy ball is $7.25. If the equilibrium wage is $290, what is the additional profit earned from hiring the third worker?

▸ $340.75

▸ $50.75

▸ $754

▸ $1044
Textbook 

Macroeconomics


Edition: 3rd
Authors:
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chandlerdeanechandlerdeane
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2 weeks ago
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$50.75

The additional profit earned from the third worker is the revenue earned by that worker, value of marginal product (VMP), minus the cost of the worker, wage ($290).
Additional profit from third worker = VMP - Wage
VMP = MP of third worker*Price of product
MP of third worker = Output of third worker - Output of second worker = 144 - 97 = 47
Therefore, VMP = MP of third worker*Price of product = 47*7.25 = $340.75
and Additional profit from third worker = VMP - Wage = 340.75 - 290 = $50.75.
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