Figure 18-2
The figure below shows the production function for a particular firm.
-Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the fourth worker?
A)10 units
B)$100
C)$1,000
D)$1,600

Question

Figure 18-2
The figure below shows the production function for a particular firm. 
-Refer to Figure 18-2. Suppose the firm pays a wage equal to $160 per unit of labor and sells its output at $10 per unit. What is the value of the marginal product of labor for the fourth worker?
A)10 units 
B)$100 
C)$1,000 
D)$1,600

Quizplus · Accepted Answer

The marginal product of labor for the fourth worker can be found by calculating the change in total output from employing the fourth worker compared to employing three workers. At the point where the fourth worker is employed, the total output is 520 units. With three workers, the total output is 320 units. Therefore, the marginal product of labor for the fourth worker is 520 - 320 = 200 units. Multiplying this value by the price of output ($10 per unit) gives the value of the marginal product of labor for the fourth worker, which is $2,000. Dividing this value by the wage paid to the worker ($160 per unit of labor) gives the number of units of labor needed to produce that value, which is 12.5 units of labor. Therefore, the value of the marginal product of labor for the fourth worker is $100.

Figure 18-2 The Figure Below Shows the Production Function for a Particular