Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily.
-Refer to Figure 18-5. Suppose the marginal product of the fifth unit of labor is 30 units of output per day. The figure implies that the
A)price of output is $4.
B)price of output is $6.
C)price of output is $8.
D)daily wage is $120.

Question

Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. 
-Refer to Figure 18-5. Suppose the marginal product of the fifth unit of labor is 30 units of output per day. The figure implies that the
A)price of output is $4. 
B)price of output is $6. 
C)price of output is $8. 
D)daily wage is $120.

Quizplus · Accepted Answer

The marginal product of labor is the additional output produced by an additional unit of labor. If the marginal product of the fifth unit of labor is 30 units and the price of output is $4, then the value of the marginal product is 30 units * $4 = $120, which matches the daily wage.

Figure 18-5 The Figure Shows a Particular Profit-Maximizing, Competitive Firm's Value-Of-Marginal-Product (VMP)