Refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.

-When the firm uses 120 units of labor, how much output does it produce?
A) 7,000 units
B) 70 units
C) 8,400 units
D) 9,200 units
E) 7,500 units

Question

Refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
 
-When the firm uses 120 units of labor, how much output does it produce?
A) 7,000 units 
B) 70 units 
C) 8,400 units 
D) 9,200 units 
E) 7,500 units

Quizplus · Accepted Answer

According to the marginal product curve, the firm reaches its maximum output at 120 units of labor, which is where the curve intersects the average product curve. At this point, the average product is approximately 70 units per worker ($\frac{8400}{120} = 70$). Therefore, the firm produces 8,400 units of output with 120 units of labor.

Refer to the Following