Exhibit 22-14

Assume that labor is the only variable input.
-Refer to Exhibit 22-14.What is the MPP of the first unit of labor [blank (C)]?

Question

Exhibit 22-14
  
Assume that labor is the only variable input.
-Refer to Exhibit 22-14.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 slope of the total product curve at that point, which in this case is 100 units.

As for the best choice, it would depend on the specific goal or constraint of the firm. If the firm wants to maximize output while minimizing costs, they should choose the quantity of labor where MPP = wage rate (in this case, 400 units of labor). If the firm is constrained by a fixed budget for labor costs, they should choose the output level where the marginal revenue product (MRP) of labor (which equals MPP times price) equals the wage rate. Without knowing more about the goals and constraints of the firm, it is impossible to determine the best choice.

Exhibit 22-14 Assume That Labor Is the Only Variable Input