Suppose a Firm Uses Workers and Office Space to Produce

question 40

Multiple Choice

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The table below describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Employee-Hours } \\\text { Per Day }\end{array} & \begin{array} { c } \text { Output } \\\text { Per Day }\end{array} \\\hline 0 & 0 \\\hline 1 & 40 \\\hline 4 & 80 \\\hline 9 & 120 \\\hline 15 & 160 \\\hline 23 & 200 \\\hline\end{array}$$ When the firm uses 9 employee-hours, its total revenue each day is:

• A)$240.
• B)$160.
• C)$120.
• D)$18.