If 9 units of labor will be supplied if the wage rate is $12 and 10 units of labor will be supplied if the wage rate is $14, then the marginal factor cost for the tenth unit of labor is
A)less than $12.
B)$12.
C)between $12 and $14.
D)more than $14.

Question

Quizplus · Accepted Answer

The marginal factor cost (MFC) for the tenth unit of labor is the additional cost the firm incurs to hire one more unit of labor, which in this case is the increase in total wage cost from hiring the tenth worker. When the wage rate increases from $12 to $14, the total cost for the additional (tenth) unit of labor is $14. However, the MFC also includes the increase in costs for all previous units of labor, which now also cost $2 more each. Therefore, the MFC for the tenth unit is the $14 for that unit plus the $2 increase for each of the previous 9 units, totaling more than $14.

If 9 Units of Labor Will Be Supplied If the Wage