Exhibit 21-14 Assume that labor is the only variable input and that each additional laborer is paid $600.
Refer to Exhibit 21-14. What is the MPP of the first unit of labor [blank (C)]?

Question

Exhibit 21-14  Assume that labor is the only variable input and that each additional laborer is paid $600.
Refer to Exhibit 21-14. What is the MPP of the first unit of labor [blank (C)]?

Quizplus · Accepted Answer

The MPP of the first unit of labor is the additional output produced by hiring the first unit of labor, which is 100 units. Therefore, the best choice is to keep hiring labor as long as the marginal product of labor is greater than the wage rate, which is $600.

Exhibit 21-14 Assume That Labor Is the Only Variable