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

question 78

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.

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