Exhibit 27-3

-Refer to Exhibit 27-3.The marginal factor cost (MFC)of the fourth unit of labor is

Question

Exhibit 27-3
 
-Refer to Exhibit 27-3.The marginal factor cost (MFC)of the fourth unit of labor is

Quizplus · Accepted Answer

Based on the graph, we can see that the MFC of the fourth unit of labor is less than the MFC of the first unit, indicating diminishing returns. Since the MFC curve is upward-sloping, we know that each additional unit of labor increases MFC. Therefore, the MFC of the fourth unit of labor is greater than the wage rate, so option A is incorrect. The MFC of the first unit of labor is $10, so option B is incorrect. Since the MFC curve is upward-sloping, we know that each additional unit of labor increases MFC. Therefore, the MFC of the fourth unit of labor is greater than the MFC of the third unit and so cannot be equal to the wage rate. Hence, option D is incorrect as well. Therefore, we can conclude that the correct answer is E, which is "b and d."

Exhibit 27-3 -Refer to Exhibit 27-3.The Marginal Factor Cost (MFC)of the Fourth