Consider labour that is hired for $18 per hour.If the last hour of labour hired produces 8 units of output which sells for $10 per unit,that labour-hour adds ________ to the firm's profit and so ________ labour should be hired.
A)$80; more
B)-$80; less
C)$62; less
D)$62; more
E)$0; no

Question

Quizplus · Accepted Answer

The last hour of labour hired generates a revenue of $80 (8 units*$10 per unit).

Since the labour cost is $18 per hour, the firm's profit from the last hired hour is $80-$18=$62.

Therefore, hiring more labour hours would add to the firm's profit, so less labour should not be hired. The correct answer is option D.

Consider Labour That Is Hired for $18 Per Hour