When Firm a Hires One Worker It Pays $10 an Hour

question 43

Multiple Choice

When firm A hires one worker it pays $10 an hour and its total labor cost is $10. When it hires a second worker, it has to pay $11 to each of its two workers and its total labor cost is $22. When it hires a third worker, it has to pay $12 to each of its three workers and its total labor cost is $36. For firm A,

• A)its marginal factor cost is greater than the wage rate it pays, except for the first worker it hires.
• B)its marginal factor cost is greater than the wage rate it pays, except for the first two workers it hires.
• C)its supply curve of labor lies above its marginal factor cost curve.
• D)it is likely that marginal revenue product is always greater than marginal factor cost.
• E)none of the above

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Definitions:

Random Variable

A variable whose possible values are outcomes of a random phenomenon, often denoted in probability and statistics.

Uncountable Number

A type of set or quantity of mathematical entities that cannot be paired with the natural numbers, indicating an infinite quantity that is not countably infinite.

Random Variable

A numerical variable that reflects the outcomes of an unpredictable event.

Standard Normal Distribution

A normal distribution with a mean of 0 and a standard deviation of 1, used in statistical analysis.