-The Figure Above Shows a Local Lawn Cutting Service's Demand

question 159

Multiple Choice

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the market wage is $300 per day, the firm will NOT hire a fourth worker because the fourth worker would create

• A) an economic loss and the firm would shut down.
• B) additional revenue that exceeds the worker's wage.
• C) additional revenue that exceeds the worker's value of marginal product.
• D) additional revenue that falls short of the worker's wage.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a good or service, crucial for decision-making in production and pricing strategies.

Average Variable Cost

The total variable costs of production (costs that change with output level) divided by the quantity of output produced, indicating the variable cost per unit of output.

Average Fixed Cost

The fixed costs of production (those that do not change with the level of output) divided by the quantity of output produced.

Average Total Cost

The cost of producing one unit, calculated by dividing the entire production cost by the quantity of units made.