The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50. $$\begin{array} { | c | l | }
\hline \text { Lab our per period } & \text { Total output per period } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 30 \
\hline 3 & 90 \
\hline 4 & 132 \
\hline 5 & 150 \
\hline
\end{array}$$ TABLE 7- 3
-Refer to Table 7- 3.If this firm is producing 111 units of output per period,its marginal cost is
A)76 cents.
B)38 cents.
C)24 cents.
D)$1.00.
E)16.7 cents.

Question

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50. $$\begin{array} { | c | l | } 
\hline \text { Lab our per period } & \text { Total output per period } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 30 \
\hline 3 & 90 \
\hline 4 & 132 \
\hline 5 & 150 \
\hline
\end{array}$$ TABLE 7- 3
-Refer to Table 7- 3.If this firm is producing 111 units of output per period,its marginal cost is
A)76 cents.
B)38 cents.
C)24 cents.
D)$1.00.
E)16.7 cents.

Quizplus · Accepted Answer

The marginal cost is calculated by the change in total cost divided by the change in output. From 90 to 132 units, the output increases by 42 units. The cost of labor for this increase is $10 (wage) x 1 (additional labor) = $10. Marginal cost = $10 / 42 units = approximately 24 cents per unit.

The Following Data Show the Total Output for a Firm