If the wage rate paid to a flour mill worker is $50 and the marginal product of a mill worker is 150 pounds of flour, this means that for each additional dollar spent on labor, there is a gain of ________pounds of flour.

Question

Quizplus · Accepted Answer

The marginal product of labor is calculated as the additional output per unit of labor. In this case, the marginal product is 150 pounds of flour per worker. The wage rate is $50, so the additional cost of hiring one more worker would be $50. Therefore, the gain in production per additional dollar spent on labor is calculated as follows:

Marginal product / Wage rate = Additional production per dollar spent on labor
150 pounds / $50 = 3 pounds

Therefore, for each additional dollar spent on labor, there is a gain of 3 pounds of flour. The best choice is B.

If the Wage Rate Paid to a Flour Mill Worker