Refer to the following:
The price of labor is $15 per unit.
-How many units of labor should a firm use to produce 2,000 units of output at the least cost?
A) 40
B) 50
C) 80
D) 100
E) none of the above

Question

Refer to the following:
  The price of labor is $15 per unit.
-How many units of labor should a firm use to produce 2,000 units of output at the least cost?
A) 40 
B) 50 
C) 80 
D) 100 
E) none of the above

Quizplus · Accepted Answer

To minimize cost, the firm should use labor up to the point where the marginal product of labor (MPL) equals the wage rate. In this case, the MPL is not given, so we cannot calculate the exact number of units of labor needed. However, we know that if the firm were to use less than 50 units of labor, then they would not be producing at the lowest possible cost, since there would still be room for them to increase production and decrease their cost per unit. Therefore, the best choice is B) 50 units of labor.

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