Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the total cost of production when the firm hires 7 workers?
A)$66
B)$76
C)$906
D)$946

Question

Quizplus · Accepted Answer

The total cost of production includes both fixed and variable costs. Fixed costs are $6. The variable cost for 7 workers is 7 workers * $10/worker = $70. Therefore, the total cost is $6 + $70 = $76.

Suppose That a Firm Has Only One Variable Input, Labor