when you are given the units of resource, total product, and marginal product, what do you need to find to determine how many resources the firm will employ, what the MRP would be etc...
To determine how many resources the firm will employ and what the marginal revenue product (MRP) would be, you need to find the value of each unit of resource (also known as the marginal product value or marginal revenue product).
Here's the step-by-step process:
1. Start with the information given:
a. Units of resource: This refers to the quantity of the resource being used, for example, labor hours, capital equipment, etc.
b. Total product: This represents the total output or quantity of goods or services produced using the given units of the resource.
c. Marginal product: This indicates the additional output gained from employing one more unit of the resource.
2. Calculate the marginal product value (MPV) or marginal revenue product (MRP):
a. To calculate the marginal product value, divide the change in total product by the change in units of resource. This gives you the additional output per unit of resource employed.
MPV = Change in Total Product / Change in Units of Resource
3. Determine the resource employment level:
a. The firm will generally employ resources up to the point where the marginal product value equals or exceeds the resource's cost.
b. Compare the MPV/MRP to the resource's cost. If the MPV/MRP is greater than or equal to the cost, the firm will continue employing more units of the resource until the MPV/MRP equals the resource's cost.
c. If the MPV/MRP is lower than the cost, the firm will not employ more units of the resource.
4. Calculate the MRP (Marginal Revenue Product):
a. The MRP is calculated by multiplying the marginal product value (MPV) by the price or revenue generated from each additional unit of output.
MRP = MPV * Price or Revenue per Unit of Output
5. The MRP represents the additional revenue generated by employing one more unit of the resource. It helps the firm determine the value the resource is adding to its production process.
By following these steps and evaluating the relationship between resource cost, MPV/MRP, and the level of resource employment, you can determine the number of resources the firm will employ and the associated MRP.