Custom Cabinets operate in a perfectly competitive market and employs labor
and capital. Labor costs $30 a day. Machines cost $36 a day. Currently,
Sullivan's has six machines and the marginal revenue product of capital is
$30. Output sells at $5 per unit. Sullivan's hires you as a consultant and
provides you with the following production function.
1.Explain, in your
own words, the meaning of MRP.
2.How is MRP
3.Using the data
presented, in the short run, how many workers would you recommend Sullivan's
hire per day to maximize profits?