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:

Essential Resource

A fundamental input or commodity that is considered vital for the production of goods and services and the functioning of an economy or ecosystem.

Economies

Broad systems involving the production, distribution, and consumption of goods and services within a society.

Marginal Revenue

The increased earnings a business obtains from the sale of one extra unit of goods or services.

Maximizing Profits

The process by which a firm adjusts its production to achieve the highest possible profit.