Suppose That a Firm Has Only One Variable Input, Labor

question 225

Multiple Choice

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the total cost of production when the firm hires 7 workers?

• A)$66
• B)$76
• C)$906
• D)$946

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Definitions:

Mean Square Treatments

In the context of ANOVA, a measure of variance among the means of different groups, calculated by dividing the sum of squares due to treatment by the degrees of freedom for treatment.

F-test

A statistical test used to compare two variances and ascertain if they come from populations with equal variances.

Total Variation

Refers to the overall difference between individual values and the mean within a dataset, capturing the spread.

Sum Squares Error (SSE)

The total deviation of the observed values from the values predicted by a model, squared and summed up.