Question 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 the firm produces 90 units of output. Fixed costs 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 marginal cost of production when the firm hires the 7th worker? (Please show the process of getting the answer) a. $10 b. $1.50 c. $2.50 d. $5
Question
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 the firm produces 90 units of output. Fixed costs 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 marginal cost of production when the firm hires the 7th worker? (Please show the process of getting the answer)
| a. | $10 |
| b. | $1.50 |
| c. | $2.50 |
| d. | $5 |
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