The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
TABLE 7-3
-Refer to Table 7-3.What is the total output per period when this firm is employing labour such that the marginal product of labour is at its maximum?
A)30
B)60
C)90
D)132
E)150

Question

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.What is the total output per period when this firm is employing labour such that the marginal product of labour is at its maximum?
A)30 
B)60 
C)90 
D)132 
E)150

Quizplus · Accepted Answer

To find the point of maximum output per period, we need to look for the point where the marginal product of labor is zero. From the table, we can see that the marginal product increases as we add more labor up to the 3rd unit of labor, after which it starts to decrease. Therefore, the maximum output per period can be obtained when we employ 3 units of labor. At this point, the total output is 132 units (11x12). Therefore, the answer is D.

The Following Data Show the Total Output for a Firm