A firm faces competitive markets for its inputs and its output.At the profit-maximizing level of output,its marginal cost is $10 and the wage paid is $2.If the MPL = L^-0.5,what is the marginal product of the firm? A) 0.10 B) 0.2 C) 0.35 D) 5

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Quizplus · Accepted Answer

The firm maximizes profit where the marginal cost (MC) equals the marginal revenue product of labor (MRPL), which is the wage rate (W) divided by the marginal product of labor (MPL). Given MC = $10 and W = $2, we have $10 = $2/MPL, solving gives MPL = 0.2.

A Firm Faces Competitive Markets for Its Inputs and Its