Suppose That the Firm's Only Variable Input Is Labor

question 13

Multiple Choice

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.What is the marginal cost?

• A)$0.63
• B)$0.94
• C)$1.60
• D)$3.20
• E)none of the above

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Definitions:

Grams

A metric unit of mass equal to one thousandth of a kilogram, often used to measure small quantities of material.

Materials Standards

The expected cost and quantity of materials required for the production of goods, used as a benchmark for evaluating performance.

Labour Hours

The total number of hours worked by employees during a specific period, often used to measure labor input in producing goods or services.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs incurred and the expected (or standard) costs for the achieved level of production.