If an additional unit of labor costs $20 and has a MPP of 15 units of output,the marginal cost is

Question

Quizplus · Accepted Answer

To calculate the marginal cost, we need to divide the cost of an additional unit of labor by its marginal product, which gives us:

Marginal cost = Cost of labor / Marginal product

The cost of an additional unit of labor is $20, and its marginal product is 15 units of output.

Marginal cost = $20 / 15 = $1.33

Therefore, the best choice is B as it gives us the correct marginal cost.

If an Additional Unit of Labor Costs $20 and Has